There’s a tendency to lose focus on past Trumpian insanities while fixating on the most recent ones–and insanities come daily from our mad would-be king. But as we approach the next arbitrarily-set date for the institution of his further, higher tariffs, it’s probably a good time to revisit the impacts of one of his biggest and most damaging misconceptions. In a recent column, Michael Hicks patiently explains why we citizens will pay for that misconception, and why the costs Americans will have to absorb due to Trump’s tariffs are worse than additional costs attributable to inflation.
As Hicks writes, “the average American family will pay about $2,500 more this year because of tariffs. But unlike inflation, your wages won’t rise to compensate. That’s because tariffs work differently than inflation.”
Inflation is a decline in the value of currency over time. It happens because there is too much currency in circulation. That extra money can enter the economy through a growing deficit, as happened after the 2020 CARES Act, the 2021 American Rescue Plan and—the most inflationary of these—President Trump’s Big Beautiful Bill.
When certain tax and spending policies meet monetary growth ( a result of miscalculations by the Federal Reserve), the result is inflation. Inflation affects all goods and services, including wages. (During the last inflationary bout, wages actually grew more than prices for the average private sector worker.) Not so with tariffs.
Tariffs work very differently. Tariffs are taxes on imports and range from 10% to 55%, depending on the country of origin, the product in question and the president’s hormone level.
Hicks reminds readers that American consumers pay tariffs–not the countries producing the goods, despite Trump’s insistence that tariffs are a fiscal punishment for the countries exporting the merchandise.
Thus far, consumers haven’t really seen the higher prices that Trump’s tariffs will produce. That’s because, as Hicks explains, imports spiked in February, March and April as American businesses bought nearly five extra months’ worth of goods. That was in order to beat the tariff deadlines and avoid the extra tax. The surge meant that “many of the goods now on store shelves and being assembled into cars, computers and washing machines were bought before the tariffs, keeping price increases relatively low.”
The consumer price index—the main measure of inflation—rose 0.3% in the latest reading. That’s modest, but it came as the Federal Reserve was successfully reducing inflation. Prices have stopped falling and are rising again.
These higher prices are solely due to Trump tariffs. They are poised to worsen substantially as the stockpile of pre-tariff goods are sold by retailers or put onto cars, RVs and other American-made products. The cost of goods sold later this summer, and until tariffs are eliminated, will continue to rise.
This increase in prices and the consumer price index will look, feel and taste just like inflation. Journalists and even economists will call it inflation, but it’s not inflation. If it was inflation, we’d eventually see wages rising as well. But higher tariff costs don’t lead to higher wages; in fact, the opposite may occur.
The tariffs took the U.S. from 2.4% growth in the fourth quarter of 2024 to -0.5% in the first quarter this year. The economy continues contracting, which will reduce wage growth and maybe even reverse it. So, as prices go up, wages will decline for the average worker.
Trump keeps insisting that his tariffs will cause businesses to increase domestic production–to build factories in the U.S. There are a number of false assumptions underlying that prediction, and we are already seeing a drop, not an increase, in factory employment. Hicks notes that the two months of data that became available since Trump’s “Liberation Day” tariffs were announced show that the U.S. lost 14,000 factory jobs.
As he also points out, the slowdown in the economy this year follows a pattern that virtually all economists have identified as an outcome of tariffs–one reason for the global decline in their incidence. He also tells us that price increases due to the imposition of tariffs is not–at least technically–inflation.
The technical name for rising prices during a weak economy is stagflation. And Hicks reminds us that stagflation is “what made the 1970s so miserable.”
Despite MAGA world’s constant dishonest attacks on Joe Biden, he presided over America’s robust economic recovery; he left Trump an economy that was globally envied. But then, Biden had assets Trump lacks–decency, a working brain, and a firm connection to reality.
This is a critical statement often overlooked: “Journalists and even economists will call it inflation, but it’s not inflation.”
The economists I read have discussed the difference for months, but who does Hicks think reads his articles? Brainless Braun? The IEDC?
Indiana lost $2 billio in projected revenue almost immediately from the tariffs. That’s going to start hurting big time. Add to that the strong possibility that energy prices will soar for Hoosiers. Local taxes and fees are also increasing, as the federal government has cut off the spigot to the states, meaning “no trickling down.” It’s now trickling up from local communities, taking from the people to cover operating costs. I can’t imagine what our roads would look like without the billions invested in upgrades by Biden. They are still crumbling in our neck of Indiana.
As both Sheila and Hicks note, don’t expect wages to grow to help get Hoosiers through the mess. I’ve still not seen a single word from Trump or his “economic gurus” about their plans for lost jobs due to AI. It’s going to be significant, including manufacturing jobs that are being outfitted by robotic arms. I heard Musk mention Universal Basic Income as becoming a must, but I hear nothing from Trump or Braun.
I vividly remember one thing from the 1970s, and that was all the laid-off local auto workers seeking jobs that teenagers typically held. McDonald’s got flooded with job applications overnight.
My head is spinning this morning thinking about the coming tariffs and Trump’s push for other countries “to make a deal.” Make a deal with whom? With him or the US government? And why? Who wins in all of this? Certainly not our trading partners. Not the importers. Not the end buyers… me and you. NO, it seems to me that the winners here are the billionaires who are getting the big tax break which is going to be paid for by the massive reduction of services to the American people supplemented by a tariff tax paid for by the American people through all the importers of foreign goods. The other big winner in all of this redistribution of wealth is the military industrial complex which will be grown to massive size what with all that tariff tax money pouring into the US coffers.
Folks, we are getting screwed big time, and so is the rest of the world.
I was Shapio’s Deli (an Indianapolis icon and in business since 1902) and they had a sign on the counter that, because of tariff price increases certain imported items were going up by 10%. They listed things like tea and lox along with several others items. The price increases are real and it’s going to be death by a thousand paper cuts.
The only thing that might reel it in is a big drop in the stock market or big changes in the bond market. As in Trump 1.0, it seems like the ONLY consistent policy Trump has is to make sure the stock and bond market does well. By the time we see those changes the country will most likely be deep into a recession. Remember 2020?
I foresee a possible “Big Deal” tariff outcome: a Big Beautiful Trump Resort located somewhere in each country that succumbs to the Don’s demands. He is undoubtedly the the president with the most graft money made while in office in history, just one of his long list of worsts.
Fear and Diversions- Immigrants, Trans People, A-Rabs, Iran- escalation towards A Diversionary War ?
Meanwhile- most of us worry, ponder- Indivisible- others organizing- you and I have choices NOW! We may not within 2026 if not sooner.
With excellent timing this morning, Trump has a major AI proposal, but it’s once again all about giving gifts to billionaires and AI companies. There is no mention whatsoever about preparing for the massive job losses coming our way…
https://www.wired.com/story/trumps-ai-action-plan-crusade-against-bias-regulation/?
It may end up more than “$2,500 more this year because of tariffs”. Another side effect is a 20-30% increase in property insurance as it will cost insurance companies more to rebuild a house so they are already (State Farm is raising home-owners insurance rates in Illinois by 27.2%) , or will soon be, hiking their rates up.
Here it is again, and I’ll probably grow tired of saying it: “Elect a clown, expect a circus.”
The elder Bush had no idea what those weird bar codes were all about when he once, ONCE I SAY, visited a supermarket during his tenure. None of these guys live in the everyday, real world, but Trump would not know what a supermarket is, by comparison!
I don’t think Trump has the attention span to conceive and develop the endless stream of attacks on the working class. Steven Miller, might; he seems like a surrogate Hitler. Peter Navarro I think is the brain behind tariffs. The all out assault is the divide and conquer. The resistance needs a unifying message to recruit others and grab the spotlight. I’ll bet my next paycheck that there are millions more that are as tired of seeing and hearing Trumps drivel as I am and will help rid the country of these nazis.
The seedcorn we put away for our grandchildren to eat the harvest from is now being enjoyed at Mar-a-Lago and in DC by drunk on power celebratory Redcoats who have sneaked in the back door over the last few decades.
While Trump had the country focused on the north and south borders, the threat always was he and Steven Miller the master puppeteer.
The damage to our future is incalculable in terms of economics, global standing and regard, security, healthcare, education, STEM, energy, climate, and social stability.
We the people will be forced to literally or figuratively storm our own gates in DC and Mar-a-Lagos everywhere to take back our future.
OK, my head still spinning. So what IS the deal Trump want other countries to make by his threatening tariffs???? Does he want other countries to lower the price they charge US buyers for their goods? This would lower the dollar amount buyers would pay in tariffs yet still give the US government a boost in revenue coming in that would help pay for the big tax breaks he is giving to his rich friends. It would also slow the growth of the economies of countries he sees as our competition. Has Trump set those tariff percentages high in order for him to “negotiate” them down and still get what he wants? I think so.
I keep thinking of what Epstein said about Trump in his deposition of 2010. Epstein told that when he asked Trump why he slept with married women, Trump answered, “Because it is wrong”. Is doing “wrong” Trump’s motivation in the rest of his life too? If so, it sure answers a lot of questions.
The infiltration of this convicted felon and rapist into our lives is impossible to track completely as we struggle through our days and suffer through our nights never knowing what the next day will bring. The problems are becoming insurmountable in small ways we didn’t consider through the nearly 10 years of him becoming personally involved in our most personal and intimate day-to-day activities. We have had presidents before we didn’t like or trust but they didn’t take over our every thought, decision and action which had been routine and didn’t require stopping to wonder if we should make a different decision with our entire future in question every day.
The only blessing I have found in this second insanely progressing Trump administration is that we haven’t again run out of toilet paper. Not yet anyway.
Theresa Bowers. Doing wrong seems to have been Trump’s motivation for all of his life. It’s nothing new. If any one can give an example of when he made an effort to anything because it was right for anyone but himself, bring it on!
Sharon Miller, exactly!
I hope everyone saw the show that Orange Jesus (OJ) put on going toe to toe with Jerome Powell. Powell’s response to the lie that OJ was trying to foist on him.was perfect. He was cool and calm, looked at OJ’s “proof” and told him and his audience that the building he was referring to was completed five years ago.
It’s just scares me that Powell’s term will end before OJ’s. Imagine what kind of idiot will be our next Fed Chair. Peter Navarro would be my guess. God help us!
Steven Miller always planned to take over the republic for oligarchs through the extremization of Capitalism.
He sees our current record extreme high-end wealth distribution as progress, and he is determined to finish what he started long ago.
What is going on in the rest of DC is a sideshow to entertain us, the people, while he works his evil. We are so addicted to entertainment that we don’t keep our eyes on the ball.
He learned his craft by watching Putin, whom Miller worships as the once-and-future czar.
You’re right, Pete.
Now that Miller is in power, he will do anything to maintain it. I expect anything!
The question is, will he see Trump as a useful idiot to his power, but if Trump becomes a liability to him and the WH, will he throw Trump under the bus to save his skin? I think one of the ultimate conmen in D.C. is not Trump or Miller, but JD Vance. I think Thiel is managing his every move at this juncture. 😉
I often complain that people attribute Project 2025 goals to Trump, when he cares little about them. This is manifestly not true of tariffs. For e very long time, Trump has had a blind insanity when it comes to tariffs. I suspect he was once told (as opposed to read himself) that tariffs were an important part of how the early American government made money, and because he doesn’t look at things deeply (or is incapable), he just blithely figures that will work in the modern world. It’s nuts to see the world economy suffer because a single person is both utterly ignorant and ridiculously stupid.
John H; Miller considers tariffs equal to a national sales tax, the long-dreamed disguise of the wealth redistribution up crowd.