Trump’s Tariffs Are Not Inflationary
Given the conversation on cable news over the weekend, it behooves us at the Breitbart Business Digest to again explain that Donald Trump’s proposed tariffs are not necessarily inflationary, and the people telling you that they are are partisan hacks with no credibility on the matter.
It all (re-)started over the weekend when ABC’s Jonathan Karl, an anti-Trump activist who has accused the former president of waging “an assault on truth,” spoke with Biden’s Treasury Secretary Janet Yellen about the former president’s prosed tariff scheme – for all of about five seconds.
KARL: I, very quickly, want to ask you, Donald Trump floated an idea of replacing all federal income taxes with high tariffs. Any way that that is remotely feasible?
YELLEN: It would require tariffs well over 100 percent.
KARL: Okay…
YELLEN: The impact would be to make life unaffordable for working-class Americans…
KARL: All right, thank you…
YELLEN: … and would harm American businesses.
KARL: Thank you, Secretary Yellen.
And that was the end of the interview.
Hardly thorough or satisfying, this comment deserves a “missing context fact-check.” (Readers in the news business know what I’m talking about.)
So, Trump proposed a tariff of ten percent on imported goods; and ever since, the left has been trying to insist that this would mean Armageddon for American families because all of the costs would be passed through to them.
We’ve been through this before, and that’s not what happens.
President Donald Trump signs a Presidential Memorandum on Protecting the United States Lobster Industry on June 24, 2020, in the Oval Office of the White House. (Official White House Photo by Shealah Craighead via Flickr)
Fact Check: Media Spin vs. Reality
Let me make clear several points that John Carney has relentlessly hammered in this newsletter and on television appearances:
• Tariffs are not necessarily inflationary. The biggest evidence of this is that Trump expanded tariffs when he was president before, and inflation was at incredibly low rates. Biden scaled back on tariffs, and inflation went through the roof. (We can debate whether this is correlative or causal; but either way, it suggests the media fear mongering over Trump’s tariffs is not rooted in evidence). So, when the media insisted during Trump’s presidency that tariffs would be inflationary, they were dead wrong, and they never corrected themselves.
• Inflation comes from too much cash in the economy and loose Fed policies. We’ve seen way too much of both during the Biden years, as documented here just about every day. It would take a book to list all of Joe Biden’s inflationary policies in one place (or, at least, a chapter of a book); couple that with the excess savings from the pandemic flooding the economy after lockdowns ended, and inflation was always guaranteed to boom.
• You can’t get inflation from tariffs unless it leads to extra income. If people don’t have any more money (or the prospect for more money), they are not going to be willing to pay more for goods and services, and thus inflation is under control.
All of this is why Steve Eisman of The Big Short fame described the promise that Trump tariffs would drive up inflation as “ridiculous.”
Though the media insist these tariffs will raise consumer prices, we simply don’t know, and Jon Karl and Janet Yellen should at least give us that context.
Despite the current cost of living crisis—which is largely a product of Joe Biden’s policies and the broader worldview of the Democrat establishment and their corporate allies—we are now getting drive-by political commentary from the people who we should trust least on this topic.
Yet we see exactly what they’re doing: while it’s poor form to introduce a topic you don’t have time to flesh out, a full discussion would likely prove to be devastating to their overall point, which is that Orange Man’s Tariffs Bad.