Krugman: Why we ought to be concerned about Trumpflation

[Yo_Mama_Been_Loggin]

By Paul Krugman / The New York Times

My latest column was about how inflation is fading as both an economic and a political issue; which is good news for Kamala Harris and bad news for Donald Trump. Yet it remains quite possible that Trump will win. And if he does, inflation may become a major problem again.

Economic forecasters surveyed by The Wall Street Journal last month generally predicted that inflation would be higher if Trump won than if President Joe Biden (still the Democratic nominee at that point) won. As you might guess, I agree. In fact, I believe that most analysts are still understating just how inflationary a second Trump term might be.

Why? Because I don’t think even most economists fully appreciate the possible interactions between Trump’s love of tariffs, his desire to politicize the Fed and his expressed desire for a weaker dollar.

Start with tariffs. Trump has been saying for a while that he wants to put a “ring around the collar” of the U.S. economy, with 10% tariffs on everyone and a much higher rate on China. Lately he’s been going bigger, suggesting a 20% rate. I wouldn’t put much weight on these numbers, which he’s surely pulling out of thin air. But for what it’s worth, tariffs at the rates Trump is suggesting would be seriously inflationary, raising prices enough to reduce the typical family’s purchasing power by 4% according to one estimate.

https://www.heraldnet.com/opinion/krugman-why-we-ought-to-be-concerned-about-trumpflation/

[MichMan]

1. What is the Harris policy on tariffs ?

May 2024.

WASHINGTON, May 14 (Reuters) - President Joe Biden is hiking tariffs on $18 billion in Chinese goods including electric vehicles, batteries, semiconductors, steel, aluminum, critical minerals, solar cells, ship-to-shore cranes, and medical products, while retaining Trump-era tariffs on over $300 billion in goods.The United States Trade Representative's Office told Reuters it anticipates the effective date will be in approximately 90 days.

The following products will be targeted:
* Certain steel and aluminum products: Tariffs more than triple on some these products, estimated earlier at least $1 billion in goods, from the current range of zero to 7.5% to 25% in 2024. The White House cited "China's non-market overcapacity in steel and aluminum, which are among the world's most carbon intensive."

* Semiconductors: Tariffs will increase from 25% to 50% by 2025, the White House said, citing China's huge share in new semiconductor wafers coming online and a spike in prices during the pandemic. "China's policies in the legacy semiconductor sector have led to growing market share and rapid capacity expansion that risks driving out investment by market-driven firms."

* Electric Vehicles: Tariffs will increase from 25% to 100% in 2024 (on top of a separate 2.5% tariff), the White House said, citing "extensive subsidies and non-market practices leading to substantial risks of overcapacity." The U.S. Trade Representative's Office said plug-in hybrid electric vehicles will be covered by the new tariffs but not hybrid vehicles.
* Batteries, Battery Components and Parts: Tariffs on lithium-ion EV batteries will increase from 7.5% to 25% in 2024, while the tariff rate on lithium-ion non-EV batteries will increase from 7.5% to 25% in 2026. Tariff rates on battery parts will increase from 7.5% to 25% in 2024. Critical minerals: Tariffs for certain critical minerals will increase from 0 to 25% in 2024.

https://www.reuters.com/world/what-are-bidens-new-tariffs-china-goods-2024-05-14/

[betsuni]

2. K&R