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National Review
National Review
11 Apr 2025
Andrew Stuttaford


NextImg:The Corner: Tariffs: Here Comes Trumpflation

Keep an eye on the price of coffee, which has already been rising worldwide.

Forget the good CPI numbers — data from a thrown-away era. What comes next is (almost) as inevitable as night following day.

The Financial Times:

Retailers across the US are warning of a cascade of price increases and product shortages as early as this month as a result of Donald Trump’s tariffs.

Some stores are preparing to raise prices within two weeks as the threat of tariffs of up to 125 per cent raise their costs, according to the Budget Lab at Yale University, worsening persistent inflation that has already forced many shoppers to limit their spending.

Even after the US president announced a 90-day pause on additional tariffs on Wednesday, the remaining 10 per cent blanket levy on most imports will raise prices 2.9 per cent overall, costing the average household $4,700 each year, the policy research centre estimates.

“That’s almost 18 months of normal inflation happening in very short order,” said Ernie Tedeschi, economics director at the Budget Lab.

So, Americans have to pay more for “cheap baubles,” to use Treasury Secretary Scott Bessent’s term.

Well, not exactly.

The Financial Times:

Though the threat of tariffs has roiled Wall Street for days, the worst is yet to come for Main Street. The first changes would be on the produce aisle, where price increases would begin before the end of the month, Tedeschi said. The US imports 59 per cent of the fresh fruit and 35 per cent of the vegetables Americans consume, according to the agriculture department.

Fresh fruit!

Vegetables!

The extravagance . . .

Meanwhile, keep an eye on the price of coffee, which has already been rising worldwide. The only coffee grown commercially in the U.S. is in Hawaii and California, as well as in Puerto Rico. Climate is a thing (and so are some other costs). Some attempts are being made to grow it in Texas and Florida, but there is no way that domestic supply can meet demand.

The Financial Times:

Some consumers have begun to stockpile items ahead of the forecasted price increases, a move Tedeschi said would only raise them faster. At a Target store in lower Manhattan on Wednesday afternoon, shelves that normally held bottled water, paper towels and flour were empty. Employees said that while they had more inventory in the back of the store, customers were hastily purchasing non-perishable items faster than they could restock them…

As “golden ages” go . . .

And will this be a temporary “adjustment?”

Not necessarily.

As I wrote in the latest Capital Letter:

Biden-era inflation had not been fully extinguished. Now it will be given fresh life. Technically, price increases arising out of higher tariffs are not regarded as inflationary, a distinction that may be lost on those paying the higher prices. But there is an obvious danger that they will boost inflationary expectations with probable consequences that are easy to imagine.

There’s also the matter of what the Fed is going to do. Initial moves in the bond markets implied that the central bank might cut, given some signs of cracks in financial markets. A rate cut at this time would be inflationary. However, recent anxieties over the quality of U.S. assets have seen rates rise from recent lows . . .

Meanwhile:

Higher prices may prove stickier than conventional wisdom would suggest or the administration would like. Rearranging supply chains is neither quick nor inexpensive. The elimination of “too cheap” foreign competition will remove some pressure on corporations to keep prices low. A warning tweet from the FTC’s chairman about how as “we adjust to the new economic order, the @FTC will be watching closely to make sure American companies are vigorously competing on prices” can be interpreted benignly as an example of an agency advertising its vigilance. It can also be seen as a sign that the administration, following the Biden playbook, will turn to scapegoating and bullying both to rein in rising prices and to dodge the blame for them. Good luck with that.