When I write this, a lot of digital ink is spilling into inflationary pressure from Trump’s latest tariffs in Mexico, Canada and China. These are our three biggest trading partners, representing a vast amount of products than many industries and sectors, affecting both American consumers and American companies. Price concerns are legal. However, there is a need to distinguish between price changes and inflation. Tarif’s price will rise for just one time, but everything else will be held equally and the price will continue to rise. The 2018 tariffs on washing machines introduced a good example.
In 2018, President Trump forced tariffs on washing machines. Pries jumped naturally in 2018, both on the consumer side (measured by CPI) and on the producer side (measured by PPI). The entire tariff was passed to the US. However, after this first jump, prices have returned to a long-term trend that is generally declining. It didn’t cause the price to be long-term. The 11-person tariffs have been fully capitalized to prices, and the power of the market has been taken over again, and the long-term trends have returned. This is exactly what we should expect. Tax changes the curve and causes a one-off jump in price, but 11 shocks pass and the long-term trend resumes.
This is a chart created from the consumer price index of laundry equipment (source: Statistics Bureau, Series ID: CUSR0000SS30021):
Please note that washing machine prices have started to fall since 2013. This tends to be suspended until 2018 tariffs are promised. The tariffs were thrusts and prices jumped. Eleven tariffs had been fully incorporated into prices by the end of 2018, and the trend had resumed. Of course, in inflation, the trend was reve than in the 2020 hit. This chart will easily remove the fact that tariffs did not reverse the overall trend, but we have shifted the trend upwards. Consumers still saw the prices of washing machines fall, but prices were still higher than they were not without tariffs.
Fast forward to 2025. We should expect new broad tariffs to caja almost rise in prices. Given the broad nature of these tariffs, the increase in costs for bunting consumers and producers will likely appear in the inflation count numbers. But it was mechake to call them tariff inflation. Tariffs are not caused, they are associated with inflationary pressures. The bloated balance sheet of the Federal Reserve is a major source of inflation.
