Don’t be fooled. Trumpnomics tame inflation – it won’t make it worse

The whole world and the liberal media seem to transcend Trump’s tariffs and their impact on inflation. Many of the most keen critics President Donald Trump’s policies He’s the same “expert” who assured four years ago that President Joe Biden’s policies would not cause inflation. Oops!

Then there’s the argument presented by the New York Times, where many economists like Moody’s Mark Zandy say Trump’s tariffs are inflation, and so is his tax cuts.

Hello! Both tax cuts and tax cuts cannot cause inflation. This is a political defense dressed for (bad) economics.

Inflation is a disease generated by governments induced by fiscal and monetary policy, leading to dollars chasing too many dollars. Everything that increases money puts pressure on consumer prices, and anything that increases the supply of goods produced reduces inflationary pressure.

Here’s how Trump’s tariffs on China will affect drug pricing and other medical costs

As economists who believe in the free market, we are not fans of general taxes, including customs duties, and may slightly raise the price of certain products. However, there are three issues with the argument that Trump’s tariffs will cause an overall rise in prices.

The first is, of course, they are not implemented and are simply used as effective threats to make concessions. This “peace through strength” Trade wars It mimics an influential but unused nuclear power, not a normal war. Certainly, Colombia fell while Mexico and Canada were pledging to help prevent fatal drugs from crossing the border.

The second flaw in the “causing tariffs” line is that US economic activity is primarily domestic and therefore the quantitative impact of tariffs is relatively small. Currently, imports account for around 12% of GDP. A huge amount China’s imports Even if it is pushed entirely to US consumers, a 10% increase in tariffs represents a 0.2% change, as it represents just 2%. This is one of the reasons why Trump’s tariffs did not cause inflation in the first Trump terminology. However, since foreign producers are responsible for some of the fees, the price impact may be much less than this time. When selling intimate alternatives to US products, increasing prices in response to customs duties will likely result in many consumers saying goodbye.

Policies that make the American economy more productive are the best antidote to inflation.

Similarly, Trump’s promised illegal deportation of foreigners could raise prices by causing shortages of workers in some immigration-dependent industries, and thus higher prices. But let’s say that 2 million workers have been deported. In a country with a labor force of 168 million, this wage push inflation could be small. Furthermore, if wages rise, the impact of price increases on real wages for US workers will decrease.

Click here to get your Fox business on the go

But here is what lacks inflation hawk. Deportation and pressure on prices from tariffs are more than offset by other Trump economic policies, and will put downward pressure on overall inflation. Policies that make the American economy more productive are the best antidote to inflation.

Trump is proposing 15% of American products that cut income tax rates. DOGE cost reductions and federal employment caps make government products and services cheaper. And perhaps most importantly, reducing troublesome regulations reduces costs and prices.

For more information about Fox Business, click here

More drilling and mining makes energy and minerals cheaper. Trump’s push for transparency in medical prices will lead health consumers to notice costs and put prices down. Trump’s appeal for legal immigrant workers visas will be offset Illegal loss of foreign workers.

Those who warn of inflation that has run wild under Trump ignore all Trump’s policies, which are disinflation. They have forgotten that Trump has already been president for four years, and that the annual inflation rate from many of the same policies he is talking about is 1.9% or slightly less. Federal Reserve’s 2% inflation target.

One of the predictions that can go to the bank: If Trump can win spending cuts from Congress anywhere he proposes, inflation will be inflation in videnomics, like the low level of his first term It would look much bigger than a snowstorm.

Stephen Moore is a visiting senior fellow at the Heritage Foundation. Thomas Phillipson is an economist at the University of Chicago and chaired the Council of Economic Advisors under President Donald Trump. Moore is a co-founder and Philipson is a visiting researcher at Unleash Prosperity.

For more information about Stephen Moore, click here