- 2 days ago
With President Trump unleashing sweeping tariffs, here's how it might impact your wallet.
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00:00Well, we also have the tariff deadline on Friday.
00:03We know that President Trump has said it will not be extended.
00:07We'll see if that's actually the case.
00:09But it sounds to me like you think that will be more of a one-off kind of price shock.
00:14But how should we be thinking about the economic impact of even one-off higher prices?
00:20Yeah, it's not good.
00:23I mean, and in fact, you know, you look through all the ups and downs and all the rounds of the tariffs and the noise.
00:28Because tariff rates are going up, and they're going up a lot.
00:31I mean, you go back to the beginning of the year, the effective tariff rate across all countries' products was just over 2%.
00:38Now, with everything in place, it feels like we're going to settle in somewhere around 15% to 20%.
00:45That's a very substantive increase, and that means higher prices and inflation will pick up.
00:51I think the price level will rise by a point, a point and a half.
00:54So instead of inflation, where it is today at 2.5%, that's the consumer expenditure deflator, that measure,
01:01will be at 3.5%, 4% by next spring, summer.
01:05That's pretty substantive.
01:06And it will also mean weaker growth because, you know, those tariff increases, those higher prices are an effective tax increase.
01:15It cuts into people's purchasing power.
01:17You know, if I have to spend more on an imported good, food or clothing or whatever it is, I have less to spend on everything else.
01:25And so that cuts into economic growth.
01:27So, you know, I buckle in.
01:29You know, I think the next 6-12 months are going to be uncomfortable for the economy.
01:32You know, I think we'll be able to avoid recession, but it's very close.
01:36And I think we can stay with a high degree of confidence that it's going to be an uncomfortable environment.