For some reason, the president and his allies aren’t clamoring to take credit.
Fox News reported on a new Federal Reserve paper that finds that new tariffs have caused prices of U.S.-made consumer goods to rise in tandem with prices of imported goods. Without the tariffs, prices would have fallen moderately over the past year. Instead, they rose by about 2 percent:
The researchers estimated that tariffs added about 2.9 percentage points to prices across the goods they studied. And the impact, notably, was not limited to imported products facing the most fallout from tariffs. The New York Fed found that Trump’s policies pushed up prices on American-made goods.
Researchers estimated that about two-thirds of the tariff-related price increase came from imports, while roughly one-third came from products made in the United States.
Well, yes.
The purpose of tariffs, for most protectionists, is to allow domestic producers to raise their prices by forcing up the prices of their foreign competition by an even higher amount, or by discouraging them from selling in the United States at all. This is the mechanism by which tariffs are supposed to encourage re-shoring. Higher domestic prices are the point. The problem, according to protectionists, is that manufacturers’ pre-tariff prices are too low because of foreign supply.
In that sense, tariffs are working as intended. Yet for some reason, the president and his allies aren’t clamoring to take credit for the higher prices they helped produce. Perhaps if the administration had told Americans of the trade-offs inherent in tariffs, the tariffs would be harder to sell.