Oh they grasp it just fine. They are, however, hoping that the average American does not grasp it.
Trump might be stupid enough to believe that tariffs are paid out of state, but his advisors and other ilk certainly do not. They’re just doing whatever they can to try and convince a majority of Americans that they’re not actually paying it.
“Do not believe your lying wallet.”
Affectionate-Panic-1 on
The coherent argument you could make about tariffs not necessarily leading to inflation is that they help reduce deficits. Inflation accelerates when there’s more money (ie demand) trying to purchase goods or services than availability at the given price.
So if the average household has to spend 1k more on automobiles per year due to tariffs (very rough number but bear with me), that’s 1k less that each household has to spend on other goods and services. Every household is in the same predicament, therefore the cost of other things will rise more slowly (or even drop) because the amount of money circulating into the economy is reduced to pay for the tariffs.
That’s generally why inflation has stayed fairly stable despite the tariffs over the past year.
Biggest risk in my opinion is to US exports (both services and goods) due to damaging relations with other countries. Overall the world is wealthier with free trade, and countries specializing in what they’re best at, but if the rest of the world maintains free trade despite US actions I’m not sure it’ll be a major negative to the US economy.
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Oh they grasp it just fine. They are, however, hoping that the average American does not grasp it.
Trump might be stupid enough to believe that tariffs are paid out of state, but his advisors and other ilk certainly do not. They’re just doing whatever they can to try and convince a majority of Americans that they’re not actually paying it.
“Do not believe your lying wallet.”
The coherent argument you could make about tariffs not necessarily leading to inflation is that they help reduce deficits. Inflation accelerates when there’s more money (ie demand) trying to purchase goods or services than availability at the given price.
So if the average household has to spend 1k more on automobiles per year due to tariffs (very rough number but bear with me), that’s 1k less that each household has to spend on other goods and services. Every household is in the same predicament, therefore the cost of other things will rise more slowly (or even drop) because the amount of money circulating into the economy is reduced to pay for the tariffs.
That’s generally why inflation has stayed fairly stable despite the tariffs over the past year.
Biggest risk in my opinion is to US exports (both services and goods) due to damaging relations with other countries. Overall the world is wealthier with free trade, and countries specializing in what they’re best at, but if the rest of the world maintains free trade despite US actions I’m not sure it’ll be a major negative to the US economy.