Would former President Donald Trump’s proposed new tariffs especially on Chinese goods reignite inflation?

Many opposing Trump, the tariffs or both insist a new round of tariffs would be inflationary. Those making this argument are mostly wrong. While valid arguments compete on both sides of the tariff debate, the inflationary aspect should be set aside.

To be sure, the inflationary potential of new tariffs is superficially intuitive. But the intuition is wrong, resting on two misunderstandings relating to inflation itself and to the oft-ignored yet crucial concept of relative prices. (RELATED: TERENCE P. JEFFREY: Joe Biden Is The $7 Trillion Dollar Man)

The inflation environment results from the monetary policy of the recent past and to a far lesser extent on current specific economic conditions. The Biden inflation surge resulted from the Federal Reserve running a loose monetary policy for too long.

The surge subsided when the Fed tightened and inflation will return to its 2% target as long as a restrictive policy continues long enough.

Inflation’s basic trajectory firmly reflects monetary policy,........

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