Kevin Hassett: If You Say Tariffs Are Causing a Positive Shock to Inflation, Then You Must Explain Why Inflation Is Running at About Zero

RUSH EXCERPT:
HASSETT: "Right. Well, let‘s unpack these things. First of all, if you look at the latest inflation numbers, right, the consumer price index was negative for the month of June. Core was zero. That‘s the thing that the Fed cares about. The pce index, which is the Fed‘s number one index, was negative both for core and top line. And so all of the price data have been decelerating. Now there was a big inflation in the previous administration, but there‘s been rapid deceleration of inflation under President Trump. And so if you‘re going to tell a story that tariffs are causing some kind of, you know, positive shock to inflation, then you‘ve got to come up with some counterfactual that explains why it is that right now, inflation is running at about zero. And so I don‘t think that that‘s that‘s an issue. And I think that again, going forward, if you look at imports. So the trade policy has made everybody want to onshore their stuff. If you look at imports right now, 50% of imports in the U.S. are capital goods, which are going into those factories that are being built by the 80 something thousand construction workers in the factories. And so that‘s a very, very successful trade policy because it‘s creating jobs that we‘ll see in the second half of the year when the lights go on in those factories."