Predictions from influencers, economists, and politicians suggest that President Trump’s tariffs will trigger a wave of inflation, pushing prices up and burdening consumers. Yet, as summer rolls on, with beach outings and barbecues, the inflation we were warned about seems absent. So, where is it?
According to recent government reports, inflation hasn’t spiked; in fact, it’s lower than it was last year. Many experts appear to have missed the mark again. But why?
The short answer is that tariffs don’t always lead to inflation.
The Walmart Effect Explained
Consider how Walmart maintains its low prices. As the biggest player in the retail market, it sets the tone. Producers either reduce costs or risk being cut off from the shelves. To reach Walmart shoppers, they must comply, leading to lower prices across the board.
Now, apply this idea on a larger scale. The U.S. is the largest consumer market globally, with Americans spending over $19 trillion on goods in 2024 alone.
This immense market power gives the U.S. leverage. When tariffs are imposed on foreign products, those manufacturers must decide whether to absorb the costs or lose access to this lucrative market. History shows they often cannot simply pass on the full costs to American consumers without losing business.
A recent survey indicated that around two-thirds of manufacturers expect foreign suppliers to absorb the tariff costs rather than hike prices for U.S. buyers.
Avoiding Tariffs: Buy American
What many alarmists neglect to mention is that customs duties can be circumvented altogether. By purchasing American-made products, consumers avoid these added costs.
Though $4 trillion in imports seems significant, they make up only about 13% of the U.S. economy. This fraction is minor enough that it’s unlikely to trigger widespread inflation.
In fact, tariffs apply pressure where it counts, prompting foreign rivals to compete with American businesses or risk losing ground. This scenario creates new opportunities within the domestic market. Plus, when production scales up, costs typically decrease due to fundamental economic principles, which also bolsters national independence.
Desire for Low Prices? Address the Trade Gap
While media discussions often focus solely on consumer prices, there are other forms of inflation that tariffs can help mitigate.
The U.S. consistently imports more than it exports. This trade deficit won’t vanish on its own; it’s offset by selling assets and incurring debt. At present, foreign entities own trillions in American real estate and farmland, which pushes housing costs up and keeps many American families out of the market.
Furthermore, foreign firms hold more than $8.6 trillion in U.S. Treasury securities, creating a yearly interest obligation. Over $150 billion is sent abroad annually just to manage that debt. In essence, we’re borrowing from our competitors to buy their products. It seems unwise.
Is Price a Justifiable Trade-off?
Even if tariffs do cause slight price increases—though data suggests they don’t—the real price of cheap goods is far greater. The survival of the nation isn’t inconsequential compared to this trivial increase.
This notion was central to my book, which discusses how tariffs can bring jobs back and revitalize American aspirations. America is more than an economy; it embodies people, culture, and way of life.
We can’t take everything for granted and assume it should remain outsourced. Duties on imports are essential to foster self-sufficiency. They safeguard our borders, protect workers, and secure our future.
In the end, is it truly worth sacrificing political and economic autonomy for a few cents off low-quality items from abroad? I don’t think so.
