Rising Prices and Costs from Tariffs are Impacting Inflation
Most of us have read about tariffs and rising prices. Coupled together a piece from The Economist and Robert Reich’s latest.
“Trump’s impact on the economy and the nation? The damage from the tariffs that are in place is starting to be felt. The collapse in migration is an enormous and underappreciated shock to the economy. Between 2000 and 2020 annual net migration into America was 1million, on average; under President Joe Biden it reached 2.5 million a year. In 2025 net migration could be zero or negative for the first recorded time since the Depression.
Higher inflation and The Economist‘s “tracker suggest Mr. Trump’s tariffs are currently boosting consumer prices by 0.3 percentage points.”
Office Hours: “Will Rising Prices Sink Trump?” Robert Reich
For years, voters believed that, despite all of Trump’s chaos and controversies, he’d still do a good job with the economy.
No longer. Voters are furious about high prices.
Trump’s economic approval numbers have hit new lows in all major polls: CNBC, Quinnipiac, Pew, Economist/YouGov.
Trump’s tariffs have caused prices to soar, as has his massive push to deport unauthorized immigrant workers. And Affordable Care Act enrollees are now learning about double-digit increases in their payments starting January 1st, due to Trump’s refusal to extend ACA subsidies.
So, today’s Office Hours discussion question: Will higher prices sink Trump (along with Trump Republicans running for reelection in next year’s midterms)?
I’ve heard several views:
1. Yes. He was reelected mainly because voters thought he’d bring prices down. Yet just the opposite is occurring. He won’t be able to weasel out of this, nor will his lapdogs in the Republican Party. If Dems focus on the economy, they’ll win overwhelmingly next year.
2. Yes, but with caveats. While it’s clear that Trump’s policies — on tariffs, immigration, agriculture, and health care — are causing prices to rise, these are all complicated issues, and Trump is an expert at sowing confusion and blaming his opponents. Dems need to clearly explain the connections between his policies and rising prices.
3. Not really. While the economy is important to voters, so are the other issues Trump is focused on: immigration, crime, and national defense. Most polls still show Trump is more popular among the public now than he was at this point in his first term. Moreover, he dominates the media. The Dems have no spokesperson anywhere near as charismatic.
4. Not at all. History shows that economic stresses can cause a public to defer to a strongman more than they’d normally do. Trump is adept at acting as if he’s in charge. The larger the economic crisis, the more voters will defer to him. In fact, he’ll use an economic crisis to expand his power. Besides, the public’s view of Democrats and the Democratic Party is even worse than its view of Trump.