Donald Trump has officially abandoned his promise to fix inflation. Maybe he never intended to fix it at all.
The president was elected with a mandate to reduce prices, having promised that he’d lower the costs of everyday items such as eggs and bacon on Day 1. Yet a week into office, he has offered zero plans to do so. At best he has ordered his underlings to brainstorm concepts of a plan for cutting prices … and then report back in a month.
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Worse, he has undertaken a litany of measures that would raise the cost of living.
Markets breathed a sigh of relief when new tariffs did not materialize on Trump’s first day in office. But a spat with Colombia over the weekend led him to threaten 25 percent tariffs on Colombian products, jolting coffee prices to record highs. Recall that the last time a tyrannical leader imposed tariffs on Americans’ preferred caffeinated beverage, it didn’t go so well.
Meanwhile, on Friday, Trump’s U.S. Trade Representative began preparing paperwork to impose broad tariffs on China. Trump’s aides are also agitating to impose 25 percent tariffs on Mexico and Canada as soon as this Saturday. Contrary to Trump’s claims that only foreigners would suffer from these duties, these trade wars would raise U.S. prices on everything from tomatoes to automobiles to lumber to gasoline and natural gas.
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Never mind his campaign promises to cut energy prices in half. Sure, Trump signed an executive order last week promising to unleash “Energy Dominance”; this would be more impressive-sounding if we didn’t already have record-high energy production. The United States is producing more oil today than any country on Earth has, ever. (Natural gas production is near all-time highs, too.)
Egg prices have also reached record highs — wholesale prices now average $6.55 for a dozen large eggs — as farmers cull flocks exposed to bird flu.
To be sure, Trump didn’t cause chickens to fall ill. (Neither did Joe Biden, but that didn’t stop Republicans from blaming Biden for high egg prices last year.) But Trump’s actions aren’t exactly helping. He has shut down external communications from U.S. public health agencies, leading to uncertainty about what kinds of updates on bird flu civil servants are even allowed to publicly disclose.
Nor is it helpful that, in the middle of this worldwide zoonotic outbreak, Trump has paused grant reviews for new medical research and pulled the United States out of the global organization that tracks infectious pathogens.
Asked on Sunday why Trump has done nothing so far to address prices, his ally Sen. Lindsey Graham (R-South Carolina) claimed that it was never Trump’s priority to begin with. “I was pretty involved in the last campaign,” Graham said. “For every time he talked about eggs, he talked about illegal immigration 1,000 times.”
This might disappoint voters, most of whom ranked the economy as the most important issue in this past election — and who, after Trump won, overwhelmingly said lowering prices should be top priority.
In any event, these competing objectives that Graham mentioned — kicking out immigrants and reducing consumer prices — are at odds. That’s because many immigrants are employed in industries experiencing labor shortages and price pressures, such as agriculture, home construction and food services.
In California’s Central Valley, migrant farmworkers have stopped showing up because they fear immigration raids, virtually halting the region’s citrus harvest. Construction workers in Chicago have reportedly stayed home too.
As I’ve explained, it’s not only undocumented workers who are at risk in Trump’s immigration crackdown. It’s also immigrants working here legally.
Trump is in the process of, for lack of a better word, “de-documenting” people who currently have work authorization, including half a million immigrants from Cuba, Nicaragua, Venezuela and Haiti allowed to work and live in the United States. Ukrainian refugees may be swept up in these de-documentation efforts, too.
Finally, there’s the Federal Reserve. The Fed has struggled to wring that last stubborn bit of inflation out of our economy. Trump’s agenda, including fiscal stimulus in the form of tax cuts, will make this job harder. If price growth remains strong, this reduces the likelihood that the central bank will continue lowering interest rates.
But Trump loves low interest rates. And now he has signaled plans to pressure the Fed into cutting rates, no matter what. As he told his audience at the World Economic Forum last week, he will “demand that interest rates drop immediately.” This will not help his cause, alas; if he succeeds in even appearing to arm-twist the Fed, that is likely to lead to even worse inflation outcomes. At least, that’s what’s happened when people in other countries believed that craven politicians, rather than independent technocrats, controlled the money supply.
As I’ve said many times before, there isn’t much presidents can do to reduce inflation, whatever their promises. But there’s a lot they can do to make things worse.
The president was elected with a mandate to reduce prices, having promised that he’d lower the costs of everyday items such as eggs and bacon on Day 1. Yet a week into office, he has offered zero plans to do so. At best he has ordered his underlings to brainstorm concepts of a plan for cutting prices … and then report back in a month.
Make sense of the latest news and debates with our daily newsletter
Worse, he has undertaken a litany of measures that would raise the cost of living.
Markets breathed a sigh of relief when new tariffs did not materialize on Trump’s first day in office. But a spat with Colombia over the weekend led him to threaten 25 percent tariffs on Colombian products, jolting coffee prices to record highs. Recall that the last time a tyrannical leader imposed tariffs on Americans’ preferred caffeinated beverage, it didn’t go so well.
Meanwhile, on Friday, Trump’s U.S. Trade Representative began preparing paperwork to impose broad tariffs on China. Trump’s aides are also agitating to impose 25 percent tariffs on Mexico and Canada as soon as this Saturday. Contrary to Trump’s claims that only foreigners would suffer from these duties, these trade wars would raise U.S. prices on everything from tomatoes to automobiles to lumber to gasoline and natural gas.
Follow Catherine Rampell
Never mind his campaign promises to cut energy prices in half. Sure, Trump signed an executive order last week promising to unleash “Energy Dominance”; this would be more impressive-sounding if we didn’t already have record-high energy production. The United States is producing more oil today than any country on Earth has, ever. (Natural gas production is near all-time highs, too.)
Egg prices have also reached record highs — wholesale prices now average $6.55 for a dozen large eggs — as farmers cull flocks exposed to bird flu.
To be sure, Trump didn’t cause chickens to fall ill. (Neither did Joe Biden, but that didn’t stop Republicans from blaming Biden for high egg prices last year.) But Trump’s actions aren’t exactly helping. He has shut down external communications from U.S. public health agencies, leading to uncertainty about what kinds of updates on bird flu civil servants are even allowed to publicly disclose.
Nor is it helpful that, in the middle of this worldwide zoonotic outbreak, Trump has paused grant reviews for new medical research and pulled the United States out of the global organization that tracks infectious pathogens.
Asked on Sunday why Trump has done nothing so far to address prices, his ally Sen. Lindsey Graham (R-South Carolina) claimed that it was never Trump’s priority to begin with. “I was pretty involved in the last campaign,” Graham said. “For every time he talked about eggs, he talked about illegal immigration 1,000 times.”
This might disappoint voters, most of whom ranked the economy as the most important issue in this past election — and who, after Trump won, overwhelmingly said lowering prices should be top priority.
In any event, these competing objectives that Graham mentioned — kicking out immigrants and reducing consumer prices — are at odds. That’s because many immigrants are employed in industries experiencing labor shortages and price pressures, such as agriculture, home construction and food services.
In California’s Central Valley, migrant farmworkers have stopped showing up because they fear immigration raids, virtually halting the region’s citrus harvest. Construction workers in Chicago have reportedly stayed home too.
As I’ve explained, it’s not only undocumented workers who are at risk in Trump’s immigration crackdown. It’s also immigrants working here legally.
Trump is in the process of, for lack of a better word, “de-documenting” people who currently have work authorization, including half a million immigrants from Cuba, Nicaragua, Venezuela and Haiti allowed to work and live in the United States. Ukrainian refugees may be swept up in these de-documentation efforts, too.
Finally, there’s the Federal Reserve. The Fed has struggled to wring that last stubborn bit of inflation out of our economy. Trump’s agenda, including fiscal stimulus in the form of tax cuts, will make this job harder. If price growth remains strong, this reduces the likelihood that the central bank will continue lowering interest rates.
But Trump loves low interest rates. And now he has signaled plans to pressure the Fed into cutting rates, no matter what. As he told his audience at the World Economic Forum last week, he will “demand that interest rates drop immediately.” This will not help his cause, alas; if he succeeds in even appearing to arm-twist the Fed, that is likely to lead to even worse inflation outcomes. At least, that’s what’s happened when people in other countries believed that craven politicians, rather than independent technocrats, controlled the money supply.
As I’ve said many times before, there isn’t much presidents can do to reduce inflation, whatever their promises. But there’s a lot they can do to make things worse.
