The Fed Will Not See Tariffs as Inflationary
A question we get asked a lot about is how the Federal Reserve is likely to react to President-elect Donald Trump’s tariffs. The short answer is that the Fed is likely to ignore them.
Critics of the tariffs have argued that
There’s no widely accepted model of the economy in which tariffs themselves are inflationary. Quite the opposite. Tariffs are a tax on importers, which lowers their income. All other things being equal, this is a deflationary impulse from tariffs.
What’s more, tariffs are likely to push up the value of the dollar against foreign currencies….
