Trump’s tariffs require a 30% duty on European Union and Mexican goods, beginning August 1. This policy will continue raising prices cumulatively over the course of the year. White House economic advisor Kevin Hassett is supremely confident that the administration’s protectionist policies aren’t costing American consumers anything. He believes these expectations are ultimately misplaced.
In short, countries who have a trade deficit with the United States are the countries that are absorbing the cost of these tariffs. They are not passing those costs onto consumers. This statement follows on the heels of a dozen or more economists who had predicted that tariffs would almost certainly result in higher prices. Hassett emphasized that consumer preferences for American products play a significant role in this dynamic, stating, “The bottom line is, people prefer American products.”
According to Harvard University’s Pricing Lab, produce prices for imported goods have increased drastically. This spike started around the beginning of March, right when US tariffs were first applied to Canada, Mexico, and China. Hassett is continuing to be very bullish about the situation, arguing that the main reason imports have dropped to historic lows is… He noted, “Therefore, the demand for imports has gone way down, so much that even with what tariffs have been there, where people would say, ‘Oh, they might increase prices at least a little bit,’ we’ve seen prices going down.”
Since his “liberation day” announcement in early April, Trump has backed off some of his most audacious tariff plans. The administration now faces two hard realities. Most recently, Trump invoked emergency powers to impose tariffs on Brazil, a move now facing legal challenge.
Fifth, world leaders should continue to voice their concern over rising trade tensions. This response is altogether appropriate given the context of Trump’s tariff attacks, most notably for the EU and Mexico. Recently ramped up skirmishes with China and the EU have added an extra layer of complexity to the global trade landscape.
Hassett’s comments come amid broader criticisms of Federal Reserve Chairman Jerome Powell’s management of monetary policy. The White House’s new focus on Powell’s mismanagement of the Federal Reserve comes amid increased focus on the renovation of its headquarters. In a particularly surprising comment, Hassett said that Trump “absolutely” has the ability to fire Powell “if he has cause.”
Further still, even with all this economic talk, other political issues have come up between them. Trump’s latest threats to revoke comedian Rosie O’Donnell’s citizenship and move Transportation Secretary Duffy into position as interim administrator of NASA. A bishop from one of the largest Catholic dioceses has granted parishioners, who might be too afraid to attend Mass due to ICE raid fear, a dispensation from going under such perilous conditions. Yet, this development is unrelated to the tariff debate.
In closing, Hassett defended the administration’s tariff strategy. He noted that the true spirit of patriotism is seen in consumer choices. He remarked, “There’s, I think, a lot of patriotism in the data.”