Our forthcoming book is The Comeback: The 2024 Elections and American Politics.
“The inflation crisis was caused by massive overspending and escalating energy prices.”
Trump is leaving out the biggest factor for the 9 percent inflation in June 2022, the highest level in 40 years: the covid pandemic.
Inflation initially spiked because of pandemic-related shocks — increased consumer demand as the pandemic eased and an inability to meet this demand because of supply chain problems, as companies reduced production when consumers hunkered down during the pandemic. Indeed, inflation rose around the world — with many peer countries doing worse than the United States — because of pandemic-related shocks that rippled across the globe. Inflation in December was 2.9 percent.
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“Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens.”
Trump is flat wrong to claim that tariffs are paid by a foreign country. Economists agree that tariffs — essentially a tax on domestic consumption — are paid by importers, such as U.S. companies, which in turn pass on most or all of the costs to consumers or producers who may use imported materials in their products. As a matter of demand and supply elasticities, overseas producers will pay part of the tax if there are fewer goods sold to the United States. Domestic producers in effect get a subsidy because they can raise their prices to the level imposed on importers. There is little debate over the fact that consumer prices will rise in response to tariffs.
