Support Our Journalism

Smart. Sharp. Funny. Fearless

Politics National News World Economy Lifestyle Store

Tag: tariffs

Inflation Rising As Trump's Confused Economics (And Iran War) Drive Costs Up

We know Donald Trump gets easily confused. During his campaign, he repeatedly insisted that he would keep us out of a war in Iran. Now, after being in office less than 14 months he started an unprovoked war in Iran. Trump obviously couldn’t remember whether he was supposed to avoid a war in the Middle East or start one.

It seems he is facing the same problem when it comes to inflation and prices. He promised to bring prices down on the first day of his presidency. While inflation had been falling to the Fed’s 2.0 percent inflation target before Trump was elected, it is now close to 3.0 % and looks to be heading higher, and that was even before the impact of his war against Iran.

We got the latest news on this front yesterday when the Bureau of Labor Statistics released February data on import prices. Non-fuel import prices rose by 1.1 percent in the month. Import prices are erratic on a monthly basis, but this followed a 0.8% rise in January. Year-over-year non-fuel import prices are up 2.5 percent.

Prices of all imports excluding fuels since April 2023Source: US Bureau of Labor Statistics via FRED

There are two important issues to keep in mind when thinking about the impact this will have on the inflation households see. The first is that this index tracks prices before any tariffs are imposed. These are the prices charged when goods come off the boat. Trump’s tariffs are added onto these prices.

If exporters were eating the tariffs, as Trump promised us, then import prices would be falling. That is clearly not what we are seeing.

The other important item to note is that these data are for February. That is before the war on Iran sent the price of oil, natural gas, and many other commodities soaring. As bad as the February data look, March is virtually certain to be worse.

This reinforces the story we saw with the February Producer Price Index (PPI). The core PPI rose 0.5 percent in February and is up 3.5 percent over the last year. The relationship between inflation at the wholesale level (the PPI) and the retail level (the CPI) is not one-to-one, but it’s a safe bet that if we see higher inflation at the wholesale level, it will be coming out of consumers’ pocketbooks down the road.

The pickup in inflation is not a surprise; it is a completely predictable result of Trump policies of tariffs, mass deportations, and ad hoc dictates to private corporations (e.g., shutting down windfarms). It is not a story of hyperinflation, as some doomsayers may have forecast, but it is a story of higher inflation that eats into consumers’ purchasing power. That’s what you get when you turn the keys of government over to a confused old man.

Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack.

Reprinted with permission from Dean Baker.

The Democrats' Opportunity, If Only They Can Seize It

President Donald Trump's approval rating is sinking and gasping for air. His average net approval stands at -13.7, which is lower than Joe Biden's was at this point in his term. This matters beyond cosmic justice: The president's approval rating is the best predictor of midterm election outcomes. When it falls below 50 percent, his party tends to lose seats, as in the 1982, 1994, 2006, 2010, 2014 and 2018 elections.

So the Democratic Party, written off as dead by some a few months ago, stands poised for victory in November. That's good, but not good enough.

The stakes are so high that a win isn't sufficient to meet the moment. We need a crushing repudiation of this fascistic horror show.

The easiest issue, perhaps surprisingly, is immigration. Since 2024, Democrats have been snakebit on the subject, afraid that their instinctive pro-immigrant positions were unpopular enough to lead voters to select a snarling villain vowing mass deportations. They can exhale. What the polls over the past year suggest is that most Americans are not white-supremacist goons like Stephen Miller, ready to trash the Constitution in the name of purifying die Volk.

Instead, voters actually believed that Trump would only deport "the worst of the worst." As they watched the inhuman treatment of gardeners, veterans, children, and American-citizen protesters, they soured fast. Following the shooting of Alex Pretti, fully 60 percent of respondents told NBC they disapproved of Trump's immigration policies, 49 percent strongly so.

If Democrats present themselves as opposing the brutal tactics of ICE and CPB and favoring firm border controls, they should find themselves in the sweet spot. Messages like Billie Eilish's "No one is illegal on stolen land" are unhelpful. By all means, get angry about the savagery; stress that law and order means that first and foremost the state cannot be the lawbreaker. But also add that borders are not notional and chaos cannot be permitted to prevail along the Rio Grande.

The other big issue on voters' minds is inflation, or "affordability." The reality is that politicians cannot actually bring prices down, as Trump promised to do in 2024, except by crashing the economy. Still, some voters presumably believed him, and they are disillusioned now. Some Democrats may be tempted to run on taxing the rich. This is a comfortable old shoe for Democrats, but as a political strategy it hasn't been terribly successful. Middle-class voters often fear that they will be labeled as rich.

On the other hand, voters have already concluded that tariffs are making life more expensive. The issue is a layup — if Democrats can get out of their own way. Nearly 60 percent of Americans blame Trump for rising prices, and 65 percent disapprove of his tariffs. Fifty-nine percent of independent voters say the tariffs have hurt the economy and their personal finances. Voters are rarely able to connect policy to outcomes, but they have done so in the case of tariffs. Back in 2024, Americans were about equally divided on the question of trade, with some favoring higher tariffs and roughly similar numbers opting for lower tariffs. Experience has changed their views.

The progressive wing of the party has long favored tariffs as a way to protect American workers from competition from low-wage nations. This muddies the waters.

Cutting tariffs is one of the only levers governments can pull that will actually reduce prices, and since price sensitivity is very much on voters' minds, does it make sense to temper that message at all? All House Democrats voted in favor of a resolution that would end the national emergency excuse for tariffs, and three Republicans joined them. This is the moment. Tariffs are bad — full stop.

Finally, a vulnerability that Democrats must overcome is seeming soft on crime. Here again the Trump administration has handed them a golden opportunity. MAGA is so fixated on ethnic cleansing that it is pulling Justice Department officials off crime-fighting to pursue immigration cases. A memo from Acting Deputy Attorney General Emil Bove directed officers who had been working on transnational organized crime, money laundering, and major drug trafficking networks to focus instead on assisting ICE. Ditto for the FBI Joint Terrorism Task Forces.

Ditto for the FBI Joint Terrorism Task Forces. In fact, roughly 25 percent of FBI agents (and 40 percent in larger field offices) have been diverted from fighting financial crimes, public corruption, cybercrime and complex corporate investigations and pulled into immigration enforcement. Most maddening are the thousands of FBI and Homeland Security agents who've been pulled from investigations of child sex abuse to assist with deportations — as if the administration needed more ways of signaling that it's OK with child sex trafficking.

In fact, roughly 25 percent of FBI agents (and 40 percent in larger field offices) have been diverted from fighting financial crimes, public corruption, cybercrime and complex corporate investigations and pulled into immigration enforcement. Most maddening are the thousands of FBI and Homeland Security agents who've been pulled from investigations of child sex abuse to assist with deportations — as if the administration needed more ways of signaling that it's OK with child sex trafficking.

Democrats should stress that the funds appropriated for ICE would be far better deployed to local police departments. Bill Clinton's promise to hire 100,000 police officers was very popular in the '90s and cut against the Democrats' soft-on-crime image. The slogans write themselves: More Cops, Less ICE.

The voters are the last redoubt in the fight to reclaim American democracy and decency, and the Democratic Party, the world's oldest political party since the advent of universal suffrage, is the only entity that can carry the burden. If they can win a resounding victory in the House and Senate in nine months, there is hope for us.

Mona Charen is policy editor of The Bulwark and host of the "Beg to Differ" podcast. Her new book, Hard Right: The GOP's Drift Toward Extremism, is available now.

Reprinted with permission from Creators

Mainstream Media Still Doesn't Know What To Do With Trump's Big Lies

A few days ago the Wall Street Journal published an oped by President Trump wherein he argued how great the US economy is on his watch and why tariffs are the main reason for that greatness. It’s a steaming mess of an argument, a firehose of falsehoods, though the one upside is that I haven’t seen it referenced anywhere. It sunk like a stone under the weight of its lies.

I won’t go through them here (though I’m about to link to a strong rebuttal), as it would be a waste of both of our times. Also, as you’d expect, it’s a greatest hits album with all the golden oldies he constantly blathers on about: inflation is zero (vs. 2.7 percent in the last CPI reading), prices are down, foreigners have invested “$18 trillion!” in America (that would be 60 percent of GDP; biz investment is currently 14 percent of GDP). The irony is that, as I’ve often stressed in these pages, the macro economy is, in fact, quite solid, even if the job market has worrisomely softened.

By far, the most potentially consequential macro development over the past few years is faster productivity growth. If that sticks—if we’re really, lastingly generating more output per hour of work—it means the US economy can grow faster without worrying about inflation picking up. Of course, there’s no guarantee that faster growth reaches working-class people in the form of higher wages, income, wealth; often, it has not. But those are all other discussions.

At any rate, I saw no reference to this hot mess until this morning, when a prominent newspaper ran a fulsome rebuttal to Trump’s claims. This new piece points out that solid research shows that, of course, tariffs have not been absorbed by exporters but passed through to American businesses and consumers, generating higher prices on those imports, hurting investment, and making production more, not less, expensive for our own manufactures, who have been aggressively shedding jobs (half of our imports are inputs into domestic production).

That prominent newspaper is the same Wall Street Journal that published Trump’s oped.

What should one make of this? How is one supposed to process the fact that the media publishes, without criticism or an accompanying fact check, a cascade of outright lies, only to rebut it a few days later? What does that say about our collective understanding of reality? And what should the WSJ have done in this case?

If you’re a newspaper with an oped page, and the President gives you an oped, you can argue that such a piece is de facto newsworthy. As the Journal editors themselves said in their rebuttal, “We thought we owed him the opportunity after our criticism of his tariffs.”

But unless his argument is fact-based and substantive, that’s ridiculous. The WSJ’s criticism of Trump’s tariffs has been wholly fact-driven—they’re consistently done great work on this, and I say that as someone whose ideology differs sharply from that of this ed board. If they say 2+2=4, nobody, not even the president, gets to pushback with 2+2=5.

I give them some credit for coming back with “no, it’s 4.” But that doesn’t fix what’s broken here.

I had a similar complaint about the New York Times' recent big-deal interview with Trump in the Oval. You can listen to the recording. They ask a question. He lies. They move on to the next question.

The only way to understand this is as performance art. It’s not a discussion about reality, facts, how policies play out in the real world. It’s a game, wherein Trump describes his alt reality and the media prints it because he’s the president and his reality matters. Which is true. It matters a lot and it’s one of the main reasons we’re in the mess we’re in. Never before has a president and his whole operation been so detached from reality, to the point wherein we see horrific things with our own eyes and they immediately say “no, that’s not what happened.”

But this is not benign, cute, or harmless. It’s not “oh, there he goes again! Whaddya gonna do? He’s the POTUS! You’ve got to run it.” It’s not just another flavor of our intense partisanship. It’s corrosive at best and fatal to democracy at worst. Allowing this false reality to fester has now been shown to be literally fatal to our fellow citizens.

I’m not a media expert, and I’m well aware that they’re in the business of selling news, and that clickbait = $ (though again, no one seemed to pick up on Trump’s op-ed). But there is no question in my mind that publishing falsehoods, even from the president—especially from the president—is not worth the money.

You may be thinking, “hey, it’s the op-ed page, not a column.” Well, I’ve written lots of op-eds and in every case, the editors insist that facts be verified. I’m not the president, but there’s absolutely no reason that the same rules shouldn’t apply.

Yes, of course, they have to cover him. But not like this.

Jared Bernstein is a former chair of the White House Council of Economic Advisers under President Joe Biden. He is a senior fellow at the Council on Budget and Policy Priorities. Please consider subscribing to his Substack.

Reprinted with permission from Econjared.

Tariffs Can Serve The Public Interest (But Not Trump's Wacky Version)

I know many people have been saying in the wake of Charlie Kirk’s killing that we have to reach out to our political opponents to lower the temperature of political debate. In that spirit, I will make a case for Donald Trump’s favorite word: tariffs.

Many of the criticisms of Trump’s tariffs have been overblown. Tariffs by themselves will not crash the economy. Tariffs are a tax; as such they pull money out of people’s pockets and leave them with less to spend.

This undoubtedly has been a major factor in the slowdown in growth in 2025. Donald Trump has unilaterally imposed the largest tax increase ever and it has had an impact on the economy.

Tariffs have been used by many countries, including the United States, to industrialize and build up key industries. This was the intention of the tariffs that Biden imposed as part of the CHIPS Act and Inflation Reduction Act. Biden wanted to build up U.S. capacity in advanced computer chips, as well as batteries, solar and wind energy and electric vehicles.

Trump’s tariffs are not in the same vein. If there is any logic to the rates assigned to different products and countries, no one has been able to untangle it. It’s clear that campaign contributions matter, as does the willingness of foreign leaders to appease Trump.

But tariffs do raise revenue. There are questions about how much revenue we need to raise. I take seriously the admonishment from the Modern Monetary Theory economists that taxes are about reducing demand in the economy, not raising revenue for a government like the United States that prints its own currency.

We can print the money we need to finance things like health care and childcare, as long as we are not pushing the economy beyond its capacities and causing inflation. But whatever the economics may be, we have to live in a reality where deficit hawks have the power to shut down any spending they decide is leading to excessively large deficits.

There are more progressive ways to raise revenue. We can raise the top marginal tax rate substantially, getting more money out of the rich while leaving the bulk of the population untouched. We can force companies to give us non-voting shares of stock in place of income tax payments. That way we could be sure that we actually collect the tax rate we target. And we can have a sales tax on stock transactions, just as we do on the sales of shoes and computers.

But insofar as we need more revenue, tariffs are not necessarily a bad place to look. Many people across the political spectrum have long argued for a value-added tax (VAT), in effect a national sales tax. The United States is one of the few wealthy countries that does not have a VAT. A VAT is undeniably regressive, low- and middle-income people pay a higher share of their income in taxes than the rich. But if it funds progressive policies, like national health care, free college, childcare and other programs that benefit the poor and middle class, the net effect could still be progressive.

Tariffs can be seen as similar to a VAT. It only taxes a subset of items; goods not services and only imported ones, but it has the advantage of being a relatively easy tax to collect. We impose the tax when goods show up at the port.

Trump has made the process more difficult by having wildly different rates on the same products from different countries and different products from the same countries. It also doesn’t help that he constantly changes the tax rates depending on how he feels and who might have gotten him angry.

Setting up a VAT would require a new administrative structure to ensure that goods get taxed at each step of the production process. This means that, for example, in the case of cars, the steel would be taxed, each part would be taxed, the tires would be taxed. The tax on all these items then would get rolled into the price of the car.

In principle, this would be the better route to go, since the same revenue could be raised with a much lower tax rate. But a uniform tariff rate of say 15 percent on all items imported from all countries would not be a terrible way to go, if it is locked in.

The impact of a 15 percent tariff would be similar to the impact of a 15 percent drop in the value of the dollar in its effect on the cost of imports. A drop in the dollar also would make U.S. exports cheaper to people in other countries, which the tariff does not, so it has less effect on the trade deficit. However, the United States and its trading partners could adjust to a tariff of 15 percent, just like they can adjust to a decline in the dollar, as long as the tariffs are not constantly changing.

For this reason, if the U.S. were to go the route of relying on an import tax as way of raising revenue it would be important to lock in the rate. That would require unambiguous legislation from Congress setting the rate with extremely limited powers for the president to alter it for short periods of time. In order to make this clear to Chief Justice John Roberts and the Supreme Court, they should probably use all caps in the legislation and incorporate the full text of the first paragraph of Article 1, Section 8 of the Constitution.

There is still the issue of an import tax being regressive, but that is the same issue that arises with a VAT. The key point would be that it would be offsetting spending on health care, childcare, and education, not Donald Trump’s tax cuts for the rich and the grift by his family, friends and campaign contributors, or his ICE army. Most people would probably consider that a good deal.

Reprinted with permission from Dean Baker.

Shop our Store

Headlines

Editor's Blog

Corona Virus

World

        About The National Memo
    
The National Memo is a political newsletter and website that combines the spirit of investigative journalism with new technology and ideas. We cover campaigns, elections, the White House, Congress, and the world with a fresh outlook. Our own journalism — as well as our selections of the smartest stories available every day — reflects a clear and strong perspective, without the kind of propaganda, ultra-partisanship and overwrought ideology that burden so much of our political discourse.
TAGS

Created By

RebelMouse

About Masthead Terms of Service Privacy Statement Advertise Contact

Smart. Sharp. Funny. Fearless

Inflation Rising As Trump's Confused Economics (And Iran War) Drive Costs Up

The Democrats' Opportunity, If Only They Can Seize It

Mainstream Media Still Doesn't Know What To Do With Trump's Big Lies

Tariffs Can Serve The Public Interest (But Not Trump's Wacky Version)

Shop our Store

Constitution Cork Coaster

Democracy Mug

Make America Think Again Hat

Constitution Rocks Glass

Headlines

Big Oil Funds Project Teaching Judges 'Healthy Skepticism' of Climate Science

Fight, Don't Fold: Trump FTC Concedes Defeat In War On Media Matters

Florida Voters File Lawsuit Challenging GOP's 'Extreme' New House District Map

Editor's Blog

Justices Gut Voting Rights To Shield GOP Majority -- And Their Own Disgrace

Trump 'Justice': Fascists Celebrate Bogus DOJ Indictment Of Southern Poverty Law Center

No Deal: Why Trump's Negotiations With Iran Are So Unlikely To Succeed

It's The Corruption, Stupid -- With Both Viktor Orban And Donald Trump

Corona Virus