Inflation Rises, Tariffs to Blame
Inflation predictably creeps upward: Consumer prices rose in June, indicating that the tariffs that have already taken effect are making everyday items more expensive for all Americans. The consumer price index (CPI) “increased 0.3% on the month, putting the 12-month inflation rate at 2.7%,” per CNBC. “Excluding volatile food and energy prices, core inflation picked up 0.2% on the month and an annual rate of 2.9%, with the annual rate in line with estimates.”
Up until June, inflation had been on the decline, sloping gloriously downward, a welcome reprieve from the rampant high inflation during the years of President Joe Biden. But President Donald Trump’s tariffs are having the effect that pretty much all credible economists said they would. “Prices of products most exposed to tariffs, like household furnishings, jumped 1 percent, significantly higher than the 0.3 rise last month,” notes The New York Times. “Prices for appliances, specifically, rose 1.9 percent, up from 0.8 percent. The apparel index increased 0.4 percent, snapping multiple months of declining prices.”
But this shows only the very early impact of tariffs. Trump is still working to strike deals—like one with Indonesia, in which imports to the U.S. would be taxed at 19 percent, announced this morning—and jack up prices on other countries, like the European Union, Mexico, and Brazil.
It’s pretty clear that worse inflation is likely to come and that we’ll encounter both higher prices in critical sectors and, possibly, weakened demand. For example, as new cars become more expensive, will people just substantially delay their purchases, hoping to wait it out until tariffs become less crippling? A country where you don’t feel like you can realistically afford a new car anymore, because prices have been jacked up due to the president’s foolhardy, haphazard decision making, is not a prosperous one.
Not to mention: Anytime inflation accelerates, the Federal Reserve is less likely to cut interest rates. So borrowing money does not appear likely to get cheaper, which means more people will be locked in place when making housing decisions, for example.
It feels like this administration is struggling to learn the lessons revealed by the prior one: People do not respond favorably to normal items getting more expensive for no good reason, nor to the knock-on effects of having to delay purchases and moves.
The funniest part of this may be the fact that we just had an election in which the losing side
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