Trump Tariffs Not Causing Inflation Says Advisor Hassett

Economic advisor Kevin Hassett has argued that the tariffs imposed by President Trump are not the primary cause of inflation in the United States. During an interview on CNBC’s Squawk Box, Hassett attributed the lack of inflation surge to a rise in patriotism among American consumers, who are increasingly opting for domestic products over imported goods.

Hassett pointed out that prices on imported goods actually decreased between December and May, a period marked by the implementation of several tariff measures under Trump’s administration. He suggested that this trend is a direct result of Americans preferring domestic goods, which has helped offset the price hikes that many economists had predicted.

Hassett further elaborated that the demand for imports has significantly decreased, leading to a reduction in inflation pressure despite the presence of tariffs. He claimed that countries with which the U.S. has trade deficits, such as Mexico, China, and Canada, are absorbing the cost of tariffs rather than passing them on to American consumers.

However, the White House acknowledges that prices could rise later this year as tariffs continue to accumulate. Hassett maintains that the patriotic behavior of consumers is currently mitigating these effects. Nevertheless, not all economists agree with this assessment. Ernest Tedeschi, an economist at Yale’s Budget Lab and a former chief economist at the White House Council of Economic Advisers under Joe Biden, criticized the White House’s methodology, stating that it understates the effects of tariffs on import indices.

Tedeschi also referenced data from Harvard University’s Pricing Lab, which indicates that import prices have risen since March, coinciding with the implementation of new tariffs on Mexico, Canada, and China. Additionally, some critics suggest that importers stockpiled goods in advance to avoid immediate price increases, which has delayed the expected inflation impact. Despite these concerns, markets have remained relatively stable, with investors seemingly confident that some tariffs may be negotiated away before they take full effect.

In summary, while Hassett argues that Trump’s tariffs are not causing inflation due to increased consumer patriotism and the absorption of tariff costs by foreign countries, critics point to rising import prices and the potential long-term effects of tariffs. The debate continues as the economic impact of these policies remains a subject of contention among experts.