New data released by the Bureau of Labor Statistics show that President Trump’s trade policy has not led to a rise in U.S. import prices, disproving the naysayers’ claims.
Earlier in April and May, President Trump announced a series of new tariffs aimed at promoting domestic manufacturing, addressing the injustices of global trade, and driving economic growth. Despite this, President Trump’s tariffs have been met with numerous anti-tariff critics who claim that these tariffs will drive up import prices and ultimately fall on the shoulders of American consumers.
Federal Reserve Chairman Jerome Powell had even used this as an excuse not to bring down interest rates despite repeated calls from President Trump, who called him a “numbskull.” Earlier this month, Powell admitted that the interest rates would have been lowered if not for the trade policy.
But now the latest data from the Bureau of Labor Statistics proves Powell and all the critics wrong. The report revealed that U.S. import prices advanced 0.1 percent in June following a 0.4 percent decrease in May. Breitbart reported that the year-over-year change is now a decline of 0.2 percent, whereas in February this number was at 1.7 percent, showing a decline in import prices for two consecutive months.
President Trump’s trade tariffs have proven effective, as import prices from China are down at an annualized rate of 3.2 percent. What this means is that it’s not the American consumers who are shouldering the costs but foreign producers. The data show that exporters like China have cut their prices in response to the tariffs and are taking on the burden themselves to stay competitive in the U.S. market.
This is also good news for the interest rate, as Breitbart reported that overall import prices are up at a three-month annualized rate of 1.9 percent. This is the rate that is consistent with the Federal Reserve’s two percent target for inflation. This is a clear sign of stable economic growth, indicating that the Fed does not need to raise interest rates further. Additionally, it suggests that President Trump will continue to push for an interest rate drop.
