Inflation

By Refusing To End Trump's Tariffs, Biden Is Making Inflation Worse

Trump's tariffs are adding an estimated 0.5 percent to annual inflation.

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Tariffs do exactly one thing: raise prices.

Right now, prices don't need any help getting higher.

Economic data released Friday by the Bureau of Labor Statistics show that year-over-year inflation hit 6.8 percent in November—the highest level recorded since 1982. Despite other indicators showing that the economy is strong, persistently high inflation is a serious problem for American households. That includes the current resident of the White House, for whom inflation is becoming a major political headache.

There's probably not much President Joe Biden can do to curb inflation in the short term. That ship sailed when he pushed for and signed off on a major economic stimulus bill earlier this year—one that economists warned was too large and could overheat the economy. Other factors influencing inflation, like the disconnect between supply and demand that's largely a result of the ongoing COVID-19 pandemic, are well beyond Biden's (or any president's) power to change.

But there is one thing Biden could do to immediately provide consumers with relief. He could eliminate the tariffs imposed by former President Donald Trump.

Those tariffs, which Biden has been stubbornly unwilling to reverse during his first year in office, are adding roughly 0.5 percent to annual inflation across the economy. That's the conclusion drawn by Ed Gresser, a former assistant U.S. Trade Representative who is currently the vice president and director for trade and global markets at the Progressive Policy Institute, a center-left think tank. Trump's tariffs on washing machines, solar panels, steel, aluminum, and a host of Chinese-made goods are a "secondary but noticeable contribution" to overall inflation right now, Gresser writes.

That's pretty much in line with what four economists at the San Francisco Federal Reserve warned in February 2019, shortly after Trump began slapping tariffs on various goods. "Imports from China are an important part of overall U.S. imports of consumer and investment goods," they wrote. "Thus, tariffs on these imports are likely to have sizable effects on consumer, producer, and investment prices in this country."

Unlike other policies that could help slow inflation, like raising interest rates, Biden could cut tariffs without having to wait for Congress or the Federal Reserve to act. Similarly, cutting tariffs would not come with some of the negative tradeoffs that other actions might. Raising interest rates will harm the economy in other ways (for example, by making it more expensive to borrow). Lifting tariffs will ease inflation and provide a tax cut to many American businesses. It is quite literally a win-win.

Again: The one and only thing that tariffs do is raise prices. That is their only function. Politicians might want to deploy tariffs (to raise prices) for a number of reasons: to protect domestic industries, to influence where in the world individuals choose to invest, to retaliate against what they perceive as unfair trade practices from other countries, and so on. But all those goals—and tariffs are poor ways of accomplishing most of them—are second-order functions. To the extent that any of those things occur, they happen because tariffs raise prices.

If Biden is going to keep ignoring this basic bit of economic reality, then he is choosing to make inflation worse than it already is.

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  1. "Biden Is Making Inflation Worse"

    Really? Biden put tariffs on smokeless tobacco?

    Because the top capitalist and leading economics expert of the Reason comment section has declared inflation a wingnut.com myth — except for a $0.10 per pouch increase in spittin' tobaccy.

    #DefendBidenAtAllCosts

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  2. Trump trade wars good!

    Biden trade wars bad!

    'Cause tribalism! Data-driven? Who needs THAT!??!

    1. Sqrlsy runs cover for Biden and the Democrats while decrying "tribalism".

      You're just a big ol' fraud, aren't you, Sqrlsygruppenführer.

      1. MarxistMammaryBahnFuhrer the Chthonic Cunt, Twat of Twits, and Jesus-killer to boot, cannot fathom the depths of her own sleazy, evil tribalism. For those with a clue, and some honesty, intellect, and basic benevolence, some understanding of this and more can be gleaned at http://www.churchofsqrls.com/Do_Gooders_Bad/ and at http://www.churchofsqrls.com/Jesus_Validated/ ...

        1. TDS-addled spastic asshole gets flagged.

    2. The Squirrel is nuts but always good for a poem.
      If I was Biden, I'd be hidin'
      behind the cloak of Trump and chidin'
      All the bads the dude be guidin'
      And get the gap to truly widen
      between the Trump and all things Biden
      The same and yet so clearly sidin'
      Until the best is always Biden
      And Trump accomplishments be slidin'
      If only it all rhymed with Brandon...

  3. How will the people who praised Trump's economic policy respond? To be logically consistent they must praise Biden for continuing to play four dimensional chess with Trump's brilliant economic policies, right? Or is the same policy totally different depending upon who does it? The libertarian perspective is that free trade, even if it is unilateral, is better for consumers regardless of the president's political party. As in tariffs were bad under Trump, and they still suck. So......

    1. Nope. Trump used tariffs as a means to coerce our trading partners into better trade deals. Biden uses them as a permanent structural part of our economy.

      Not the same, and this was addressed years ago.

      1. Except we did not get any trade deals that were substantially better. For the most part we got no trade deals.

        1. But... Trump needs our support NOW more than ever!!!

          https://www.thedailybeast.com/mypillow-guy-mike-lindell-punts-timeline-for-trump-retaking-power-as-august-conspiracy-theories-get-wackier
          MyPillow Guy Punts Timeline for Trump Retaking Power as Conspiracy Theories Get Wackier

          https://www.salon.com/2021/08/22/mike-lindell-still-in-trumps-good-graces-has-new-prediction-reinstatement-by-new-years/

          The Lord Trump didn’t return to us as scheduled, but the Second Coming is now re-scheduled. You can TRUST us THIS time, for sure!

          The Lord Trump DID return to us faithful ones, but He did it in an invisible way! Hold strong in your Faith in Him!

          The Lord Trump didn’t return to us yet, this is true! It only did NOT happen because YOU were not faithful enough, and didn’t send Him enough donations!

          The Lord Trump didn’t return to us yet, but He DID miraculously protect us all from the VERY worst forces of Evil, which is Der BidenFuhrer! Hold fast in your Faith… Lord Trump will come back VERY soon now! Especially if you send Him more money!

          The Lord Trump moves in Mysterious Ways! All will be revealed SOON! Especially if you have Enough Faith to DONATE till it HURTS!

          1. Stop digging up my yard!

            1. I can dig it! Can YOU dig it? Now, don't harsh my buzz!

              (The groovy vibes are especially hippagroovalistic in your yard, so I can NOT help but DIG IT, so Help Me Cosmic Vibes!)

        2. Define substantially.

        3. Ya; that's a lie.

          1. Depends on what you mean by better. If you mean a better deal for protected industry, yes. If you mean a better deal for the American consumer, no.

            1. You just as well of said protecting creators from the criminals (those who love stealing).

              The USMCA the AAF ending Foreign Subsidized shipping, dropping the Paris Accord etc, etc... Cutting crony socialism and ensuring individual property rights.

              Not all American consumers live by the Conquer and Consume baseline.

        4. Except we did not get any trade deals that were substantially better.

          What a monumental liar you are. Even Pelosi and Schumer acceded the fact that the USMCA was light-years better than NAFTA.

          Who the fuck are you and your spastic idiot pal trying to fool here? This isn't some reddit thread.

          1. "Even Pelosi and Schumer acceded the fact that the USMCA was light-years better than NAFTA."

            Citation please, liar!

            1. TDS-addled spastic asshole gets flagged.

        5. Hey, asshole! Haven't seen you in a while, so here's my chance to mute you!
          Fuck off and die.

        6. Yes we did. But you probably also think that the Abraham Accords are nothing too.

        7. Trade deals are always a restriction on trade and loaded up with massive special interests. So, the fewer trade deals, the better.

    2. I don't recall many praising Trump's tariffs. I do recall reading MANY articles shitting on them.
      https://www.forbes.com/sites/stuartanderson/2020/08/06/biden-says-he-will-end-trumps-tariffs-on-chinese-made-goods/

      “Some have said Trump’s stance is a good one to counter China’s influence,” said Garcia-Navarro. “Would you keep the tariffs?”

      “No. Hey, look, who said Trump’s idea’s a good one?” said Biden. “Manufacturing has gone into a recession. Agriculture lost billions of dollars that taxpayers had to pay.”

      1. I'm talking about the true libertarians in the comments who blasted Reason for not supporting Trump (The Most Libertarian President Ever) in his trade wars.

        Because the only possible excuse anyone could possibly have for opposing his trade policies is Trump Derangement Syndrome (You know, like the only possible excuse to oppose Obama's policies was racism).

        1. China is a slave owning, totalitarian, genocidal, hostile regime. The idea that no-tariff trade with China has anything to do with libertarianism or free markets is utterly stupid. And the US did far worse, granting MFN status to China, on the ridiculous premise that when you make a genocidal, totalitarian regime wealthy, they will reform.

          Many people opposed Trumps China tariffs either out of economic and political ignorance, or because they are greedy pricks. Which category do you fall into?

          The real problem is that the US isn’t doing enough. China should be bottled up, pressured, and threatened.

  4. when's the piece on the Uighurs slaving up the NBA jersey market?

    1. Koch doesn't want to PO his business partners, so only the syndicated affiliate columnists like Stossel can talk about that.

    2. That lowers prices for Americans, so it’s OK with Reason.

      In the 19th century, Reason writers would have argued for slavery, on libertarian grounds! Free trade, free markets, and comparative advantage. Just squint a little and forget about the human rights abuses and the profound violation of free market principles they represent. Modern libertarianism FTW!

  5. No Taxation without Representation. Down with King George Trump Biden!

  6. Again: The one and only thing that tariffs do is raise prices. That is their only function.

    Now do all the other unnecessary taxes, and then we can have a discussion.

    1. ^THIS +100000000000

  7. .5 out of almost 7%?

    1. It was the easiest to do a “but Trump” on.

    2. If it ain't perfect it isn't worth doing. Like the vaccine.

      1. do you understand the concept of "an order of magnitude" in difference?

  8. I opposed Trump's tariffs before, during, and after they were being implemented--and I oppose them now. Anyone who voted for Biden because they opposed Trump's tariffs on China is an idiot. It should be noted that our supply chains are changing, not only because of the pandemic but also because Emperor Xi is pushing for China to be less dependent on both exports to the United States and from the United States.

    TDS victims appear to be remaining on autopilot--blaming Trump for everything they don't like. The fact is that making China more dependent on bilateral trade with the U.S. is something that China is actively combating right now. They are decoupling from the United States--because they don't want to be in a close trade relationship anymore. Not everything is up to the president of the United States.

    1. "China’s “dual circulation strategy” seeks to reduce dependence on foreign suppliers through a domestic cycle of production, distribution, and consumption, alongside a separate cycle of external trade of goods and services. The early results of this approach provide cause for optimism from Beijing’s perspective . . . .

      Chinese economic growth and rising living standards have fueled external demand for commodities, as well as autos, luxury goods, and other sectors. This demand has made trading partners that specialize in these industries more dependent upon exports to China for future growth. This dynamic, combined with recently completed trade and investment agreements with ASEAN and the EU, respectively, have reordered China’s trade patterns. In 2020, the ASEAN bloc became China’s No. 1 trading partner, with the EU moving to No. 2 and the US falling to third place.

      At the same time, China is embarking on an aggressive push to become more self-sufficient in the high technology sector. This directive, endorsed by Xi Jinping, has been embraced at every level of China’s government and Party institutions. Jiang Jinquan, head of the Communist Party’s influential Central Policy Research Office, recently framed technological self-reliance as being essential for overcoming America’s efforts to impede China’s scientific and technological development.

      https://www.brookings.edu/articles/how-china-is-responding-to-escalating-strategic-competition-with-the-us/

      What makes you think China wants to trade with us the way they used to do?

      1. China’s end game isn’t economic growth or prosperity, it is totalitarian political and military world domination. Trade and development are just means to an end. That is why it is wrong and self destructive for the West to help China develop.

        1. Yes. Keeping our trade relationship with China in its current state will perpetuate some short-term pain, but its sadly necessary.

          This will result in some pain in the form of higher prices for (mostly) commodity goods. It may also bring some economic benefit to the left-behind in the form of onshored manufacturing capacity, though that will likely flow more to other developing nations because regulatory, cost, and cultural concerns will still pose a significant hurdle even if our relative position has improved. A better benefit still may be a qualitative improvement in those finished goods - China Inc makes everything for cheaper, but they also make everything cheaper.

          I'll personally be thrilled if my next curtain rod comes with screws that I can actually get into the wall without them stripping. If I have to pay an extra $2 I'll consider it an improvement.

      2. We should conquer them so that they will be forced to buy our opium.

    2. What about if I voted against him for his executive order taxation scheme because of every other country not named China that had taxes levied on American's buying goods from those countries?

      Seriously fuck off tell me or any other American how to vote; that is the definition of an elitist. Your analysis is subpar when it doesn't take into account the electoral college and state's political demographics. You sound like a fool when you don't into account that my vote and every other 3rd party voter in my state would not have changed a single electoral college vote if every single 3rd party vote had gone to Trump. How am I an idiot if I can read my states electoral make up and make a rational decision that my vote was best made for the Libertarian party's ballot access rather then throwing it away for Trump, since Biden would still have come away with all the electoral college votes?

      1. That’s a dumb way to vote.

      2. "What about if I voted against him for his executive order taxation scheme"

        How about you provide a cite for your claim?

        1. Ya know, I've asked a couple of times and gotten no response. Done a web search, and all I get is a reference to his 'tax holiday by EO', which doesn't strike me a too awfully bad.
          Put up or shut up.

  9. So you are saying that taxes equal inflation? That’s of course ludicrous, but even if it were true, it would be easy to fix: lower other taxes by 0.5%

    Wait, Trump already did that and more.

  10. What a Dumbass article. Higher prices due to a tariff is not an example of inflation. Inflation occurs when a currency loses value and therefore takes more currency to purchase the same goods, with or without a tariff. Like saying that there is inflation because of supply shortages, again this is not the result of a devalued dollar, rather the result of supply and demand. One would think that a writer would do their homework.

    1. Exactly.

      Reason authors are evidently as economically ignorant as Vice interns. With advocates of free markets like these, who needs enemies? No wonder libertarianism isn’t succeeding in the US.

      1. And Boehm is supposed to be the economics guy no less.

        1. Bailey is the science writer. It isn't like they are assigned topics based on their own knowledge and understanding.

    2. I’m an economics ignoramus and spotted that.

      High prices =\= inflation

  11. “The one and only thing that tariffs do is raise prices. That is their only function.”

    That is, of course, b.s. Tariffs on China are supposed to cause supply chains to shift to other nations, with the new market equilibrium having almost the same prices as before.

  12. Corporate theft, currency manipulating, increased security costs are all free i guess. No effect on prices.

    Yes, tariffs done for isolationist reasons or market reasons are terrible. Retaliatory tariffs to tamper down market distortions are not always a net gain in inflationary data as costs can go down as a response to ending those manipulations.

    This isn't high school econ Eric.

  13. Perhaps if/when Canada purchases Boeing's fighter planes, it will then coincidentally be exempted from the U.S. government’s intended buy-American policy on U.S.-built electric car purchases.

    In regards to trade, Republican and Democratic party administrations alike have long habitually sided with U.S.-based business interests when dealing with Canada. We have not only sustained decades of dairy-product harassment; similarly, consecutive U.S. presidencies have placed tariffs on imports of our softwood lumber, regardless of consistent independent (including international) trade-board rulings in Canada's favor on this matter.

    Maybe our great neighbor south may always stick it to Canada thus, however unjustly, if only because they have the formidable weight and we have comparably little. And certain American big business interests insist upon it until Canada capitulates. Perhaps we are expected to simply get used to it, somewhat like the child stuck with the school bully whose concept of his/her fair share will always be three-quarters of the pie.

    1. You’re not planning to bomb the Baldwin mansion…..are you?

      1. I think he just blamed Canada.
        #Kyle'smomisabigfatbichifthereeverwasabitch

  14. As many have said, tariffs are a voluntary tax. Don't like the new price? Don't buy the product. Want the product regardless of price? You'll pay it. Meanwhile, what happened to someone forming a company providing a similar product that is not subject to the tariff? Like, for example, an American company.

    1. The fact that, even with the tariff load, a US mfgr can't match the price.

      1. While a direct 30% of their profit margin goes to the federal government and probably indirectly 90% to pay for useless dictators to harass everything they do. There's a huge problem when dictators are making more than manufacturing.

        1. Yes. There are reasons American manufacturing can’t compete and it starts and ends with US government policies.

          To say so isn’t asking for government to put their thumbs on the market. It’s to tell them to remove the entirety of their 500 lb egos off the scales entirely.

  15. WTF Reason? .05%? THAT'S what your bitching about? Plus...., u then "blame" da Kungflu nonsense for the supply side issues? This rag has the intellectual depth of a two week old mud puddle. The causes of the supply issues ARE BEING FORCED onto the nation. These bastards r but using da Kungflu as a mask to hide WHAT is going on. Did not Reason exist in 2015? Then how the HELL can these clowns not understand and see what is going on? If this garbage magazine TRULY represents today's libertarians..., then a libertarian NOLONGER exist.
    The Phucko Knows

  16. The $5 trillion covid bill, which was all printed money (i.e. government checks and deposits) when there was no money certainly is a main driver of inflation and all the fault of Congress. Every member present voted for that bill (a few were home self-isolating from covid but voiced their support), so a veto not only would have been worthless, but used as fodder for"the President doesn't care about Americans" in a election year.
    The next inflation problems are due to Biden's policies. Shutting down the pipeline and ending all oil and gas operations on federal lands causing higher prices and ending energy independence. Everything grown, everything produced, and everything transported takes energy. The price of fuels almost doubling is certainly driving inflation.
    Yes trade wars increase inflation, but minimally compared to the other acts and policies we have seen implemented. Much of the blame belongs on Congress, both Houses, both parties. The rest of the blame is on Joe Biden and Biden's policies. Blaming an almost 6% increase on tariffs is misleading.

  17. So no tariffs with Heavily subsidized chinese products?

    While eviscerating the domestic manufacturing industry DID keep inflation lower, its created many low-paying non tradable jobs - with no healthcare and no pensions - and is destroying the USA technical advantage to prevail in future military actions.

    TRUMP tariffs are NEEDED - here is to MORE INFLATION!

  18. I agree we need some protected industries. Military and healthcare the most important. What happens if we get in a conflict with China and our high tech weapons that all run on computer chips need repairs? The pandemic and shortness of medical supplies and drugs should also teach us a lesson. Seems reason can distinguish between essential and nonessential industries , or more likely are now supporters of globalization and world government.

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