The left wing media keeps blasting Trump’s universal import tariff idea as inflationary.
Let’s not forget 3-4 years ago those same media outlets swore up and down that printing trillions of dollars to put in people’s pockets as stimulus was not inflationary and printing money is not inflationary. Afterwards those same people said inflation is transitory. Then they said universal forgiveness of student loans does not cause inflation. They’ve lost credibility a long time ago to dictate what is / is not inflationary.
The definition of what drives inflation is too many dollars chasing too few goods, or more generally speaking the imbalance of the supply of goods vs the supply of dollars chasing those goods.
So, we know that printing money by definition is inflationary. How is an import tariff inflationary if effectively it’s no different from a sales tax on imports? It’s slightly reducing the supply of goods but at the same time reduces the supply of money in the form of money being taken out of the economy from the tarriff on the import.
Also, isn’t re-shoring of US jobs and goods manufacturing something that we’ve wanted to do and this is a way to incentivize that? Why is this a bad thing? It’s an odd idea for sure but it seems the media is immediately shooting down the idea without any debate.
So, I think this is just more left wing gas lighting. Agree or disagree?
This is a good topic but your allegations are not accurate. The left wing media had no idea whether inflation would be transitory or not. The term transitory originated from people like Jerome Powell and Janet Yellin
You put 10% tariffs on imports. The companies pass this along to the purchasers. Imported things now cost 10% more. Similarly, there is no direct connection between tariffs on imported goods and re-shoring jobs to America. Companies just pass on the higher expenses to the consumer.
Domestic companies see this and think to themselves “shit we can get away with charging 10% more” or maybe 8%-9% to keep a delta between the two. Now all you’ve accomplished is you’ve raised the price of everything.
Who does this impact the most? Poor people. If you’re posting on a Wall Street forum, it probably doesn’t matter to you if basic things are 10% more expensive, but it certainly matters to the majority of Americans who are already suffering from inflation. The majority of Americans don’t give a shit what the economic definition of inflation is or isn’t - but they certainly care if things are 10% more expensive than an already high water mark.
It doesn’t make everything more expensive. It makes imported goods more expensive. Thats the point. Similar to a tax on cigarettes or alcohol.
Idea being that making imported goods more expensive relative to domestically produced goods will decrease imports and increase products manufactured here since the imported goods are by definition less competitive. And provide an incentive for companies to manufacture here, or in another country that doesn’t have the tarrifs.
The problem is most things are made in China and we (USA) literally don’t have the ability to manufacture most products. We lack the tech and infrastructure.
At the end of the day whether it works or not depends on the elastity of demand on the imported goods, and whether it is possible in the short or long term to move manufacturing. These things play out in decades, not annually.
Re-read my post. It does ultimately make everything more expensive.
Domestic companies don’t look at a 10% tariff on imported good and think “Yes, we’re going to keep our prices the same and win more customers!” - they look at it and either say “Looks like the market can tolerate an across the board 10% price increase!” or “If we only raise our prices 9%, we’re still at a discount!”
Thinking otherwise is pure fantasy.
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