Amid his countless legal battles, Donald Trump has stirred even more controversy, this time among economists. If re-elected as President of the United States he has stated he will impose a tariff of at least ten per cent on all goods entering the country. What is more, his supporters have told critics of his proposals that they are not inflationary.
Tariffs are paid by firms in the importing country which increases costs for them. They may choose to absorb these costs themselves or pass them onto consumers in the form of higher prices. As such, this would lead to Americans paying more on their weekly shops. This sounds a lot like inflation. However, once the prices have increased they are unlikely to continue increasing on a weekly or monthly basis so in that sense they are not inflationary.
