, Columnist
These Tariffs Will Be Worse Than Markets Think
Growth will slow, and inflation will limit the Federal Reserve’s response.
Trade wars don’t end well.
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How bad will the economic impact of the Trump administration’s chaotic tariff policies be? Markets seem to think that if the president won’t stop the damage, the Federal Reserve will. I think they’re too complacent.
Higher tariffs — such as those Trump is imposing on Canada, China and Mexico — affect both inflation and growth. Prices of imports rise, giving domestic producers leeway to raise their own. Sticker shock weighs on consumer spending, while uncertainty about the level and persistence of tariffs — as well as retaliation — cause businesses to defer hiring and investment.