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POWDER SPRINGS, GEORGIA - OCTOBER 28: Republican presidential nominee, former U.S. President Donald ... More Trump arrives to a Q&A with Pastor Paula White at the National Faith Advisory Summit on October 28, 2024 in Powder Springs, Georgia. With eight days left until the election, Trump is expected to continue visiting battleground states through the week including participating in a campaign rally in Atlanta tonight. (Photo by Anna Moneymaker/Getty Images)
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The Fed is tasked with fighting inflation that neither it nor Congress understands. See the accepted view among politicians, economists and pundits that if the Fed centrally plans low, but not-too-low unemployment, the price level will be kept in check. The notion of a “Goldilocks” economy would be the silliest notion in economics if the profession and those who follow it weren’t stalked by countless other incredibly dense ideas.
Which is why it’s hard not to laugh when pundits use “economists hate tariffs” as a reason to not implement them. To be clear, tariffs are mindless. At the same time, to hide behind “economists” as a reason for disliking anything is to frequently misunderstand your argument and to kill your argument before you’ve begun.
Fed Chairman Jerome Powell says Trump’s tariffs will cause inflation, which means economists think tariffs will cause inflation, which means pundits think tariffs will cause inflation. They’re all wrong.
Economics is about tradeoffs. If you purchase the more expensive car after the mindless implementation of tariffs, you logically have fewer dollars to purchase travel, food and clothing. A rising price by its very name implies a falling price elsewhere.
Please think about this as stopped-clock economists correctly point out that a mindless tariff is a tax. Since it’s a tax, by the previous definition you have fewer dollars after implementation. When economists say tariffs will cause inflation they’re saying people can endure mindless tariffs without losing a dollar of purchasing power.
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