Trump Administration Live updates: RFK JR. confirmed when Kash Patel goes on

Mr. Trump was quick to point fingers at his predecessor – an attack line by tackling it. “

But introducing customs at a time when inflation is not yet overcome is seen as a risky strategy, especially for a president who promised on the campaign track that he would bring prices down on “Day 1.”

“To introduce large increases in prices of imported goods could breathe new life into some of the inflation forging still glowing in the economy,” said Michael Strain, an economist at the American Enterprise Institute, a conservative think tank.

In Mr. Trump’s first weeks back in the White House, he has already set a further 10 percent duty on all US imports from China and beat 25 percent duty on metal imports. He has also kept the opportunity to impose 25 percent tariffs on almost all goods from Canada and Mexico, although he temporarily paused these taxes until March 4. In total, the measures will hit more than $ 1.3 trillion of US imports, and the president has said that duty for many other countries and industries, from copper to drugs, is in the works.

Mr. Trump is expected to go even further on Thursday and impose on what he calls “mutual tariffs.” It would raise the charges the United States charges on certain imports – as cars – to match what other countries impose on US products when these goods cross their borders.

The Trump administration on Wednesday gave no indication that it was preparing to change course on its financial strategy based on signs that high inflation was lasting.

Kevin Hassett, the director of the White Huss National Economic Council, said at CNN that Mr. Trump’s plans to cut down on spending, expand energy production and lower taxes would reduce costs.

It is an argument also made by Peter Navarro, the President’s Trade Advisor. “These tariffs do not happen in a vacuum,” he said in an interview in his office at the end of January.

Mr. Navarro said he expected countries like China whose economy depends on Americans buying their products to respond to US tariffs by cutting down on their own prices. “Tariffs do not cause inflation when they are imposed by the largest market in the world,” he added.

The Chinese government is also likely to devalue its currency to offset the effects of customs duties, making its goods cheaper abroad. Mr. Navarro argued that tariffs would also result in more investment in the United States and raise the productivity of workers, as he said was “the best way to fight inflation.”

Stephen Moore, a former senior economic adviser to Mr. Trump, acknowledged that “Inflation Drawing has not been killed,” but also suggested that the president’s tariffs would be unlikely to aggravate inflation in his overall agenda for tax and deregulation. Although he expressed some skepticism about the benefits of higher steel and aluminum starfish, Mr. Moore, he believed that the customs threats were probably a negotiating strategy and that Mr. Trump would succeed in limiting inflation.

“If Trump has just raised tariffs, it would probably have an inflation effect, but when you look at the entire agenda – further cuts in income taxes producing more energy, deregulating energy – in my opinion it will put pressure on prices,” Mr. .

But many economists are more troubled by the prospects.

Alan S. Blinder, a Princeton -Economist who previously served as Vice -President of Fed, warned that customs and mass portions – another cornerstone of Trump’s economic agenda – constitute “stagflationary shock.”

“They are inflationary and they are anti-growth,” he said.

According to an analysis Published by economists at the Federal Reserve Bank of Boston This month, an additional 10 percent duty on imports from China as well as a 25 percent duty on goods from Canada and Mexico could add as much as 0.8 percentage points to “core” inflation, a target , striping out unstable foods and energy prices.

The effects would be significantly greater if Trump followed through his campaign lift to impose a universal duty, the economists warned. The core inflation could increase by another 2.2 percentage points if a 10 percent tax was imposed on the rest of the world, and tariff rates on Chinese imports rose to 60 percent, their research showed.

Tariffs are typically considered as policies leading to only a one -off increase in prices that do not translate into sustainably higher inflation. However, the actual impact depends on a number of factors, including how they are phased in, if companies transfer these higher costs to consumers and perhaps most importantly if these consumers end up changing their consumption patterns to take into account higher prices.

Raphael Bostic, President of the Federal Reserve Bank of Atlanta, said at a recent event that business leaders he had spoken to expected to pass on higher costs to consumers “100 percent.”

“It’s one thing to expect it – it’s another thing to do it, and that’s why we actually have to see what’s happening,” he said.

Drawing of lessons from Mr. Trump’s first trade war in 2018 said Omair Sharif, founder of the research company Inflation Insights, that he expected higher costs to be bound to customs on certain household items would be transferred to consumers this time as well.

At that time, for example, CPI’s laundry equipment index jumped approx. 18 percent over three months after a 20 percent duty was placed on large residential washers, suggesting to Mr. Sharif that “almost the entire tariff was passed quickly.”

“I would expect something similar,” he said.

Given the uncertainty of the inflation prospects and Mr. Trump’s policy has bold chosen to clap further interest rates for the time being. Fed’s chair, Jerome H. Powell, told lawmakers this week that the central bank would see more progress that inflation was about to return to his 2 percent target and that if the price pressure did not get better, Fed “would maintain policy provision for an extended period of time. “

This plan contradicts Trump’s desire for lower interest rates, which he repeated in a social media post on Wednesday. “The interest rates need to be lowered, something that would go hand in hand with upcoming tariffs !!!,” he wrote.

Austan Goolsbee, President of the Federal Reserve Bank of Chicago, acknowledged that extraction of a signal from the inflation data is likely to become more challenging when Mr. Trump adopts policies that are expected to affect prices directly. It puts bold in an “unpleasant situation of trying to distinguish what component of the increase in prices comes from one thing that we have to look through and what is a sign of overheating,” he said in an interview Wednesday.

Fed -Officers will also look closely to see if consumers are starting to change their expectations of future inflation significantly in a material way – something Mr. Goolsbee said would be “a very alarming sign.”

So far, the evidence is poor that Americans have lost the belief that inflation will fall over time over time. The situation is still filled in considering the circumstances of the last few years.

“We have just been through the most changing inflation experience in the last 40 years,” said David Wilcox, a senior scholarship at the Peterson Institute for International Economics and the director of US Economic Research at Bloomberg Economics, who previously ran Fed’s research and statistics department. “The political risks associated with unfounded complacency with inflation must be much greater.”