One of the talking points coming from MAGA Republicans is that if President Donald Trump’s steep new tariffs were really as inflationary as economics say, prices would have already gone up a lot more.
But Trump has been slow to implement them, often announcing new tariffs only to later postpone them. And many business owners are complaining that Trump’s chaotic approach with tariffs is making it difficult to plan ahead and organize budgets.
New York Times financial reporter Colby Smith, in an article published on June 13, explains why prices in the U.S. haven’t really soared yet but are likely to do so in the months ahead.
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“Data released this week showed that inflationary pressures remained more muted than expected at this stage, raising an uncomfortable question for economists: Are their predictions wrong?,” Smith writes. “Economists are undeterred — for now. It’s not that tariffs aren’t affecting prices, they say. It’s that this isn’t happening in a significant enough way just yet to show up in broad measures of inflation like the Consumer Price Index. They argue that the impact will be much more significant this summer.”
According to Marc Giannoni, chief U.S. economist at Barclays, it’s not a question of whether or not Trump’s tariffs will raise prices—it’s a question of when.
Giannoni told The Times, “Inflation is very likely going to increase. It is a question of time, not so much of if…. I would be very, very surprised if we don’t see some stronger inflation prints in the next several months. If inflation continues to be very muted, we’ll have to go back to the drawing board.”
Stephen Stanley, chief U.S. economist at Santander, also believes the worst is yet to come.
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Stanley told the Times, “I am sure that the ‘Boy Who Cried Wolf’ dynamic is going to kick in for some. If tariffs did not affect the CPI in April or in May, then maybe all of those warnings about inflation spiking were simply wrong. I absolutely would see that take as incorrect. Price increases are coming. We have lucked out a bit, in that retailers have shown restraint.”
Thomas Simons, chief U.S. economist at Jefferies, told the Times that consumers are fed up with inflation and aren’t going to be happy to see even more of it.
Simons told the Times, “Given that we’ve had inflation increase so much over the last few years cumulatively, I think there’s significantly higher resistance among consumers to accept higher prices. They are more likely to shift around their consumption to go after things that are better value.”
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Read Colby Smith’s full New York Times article at this link (subscription required).
