Finally, on Wednesday, September 17, the Fed announced a quarter-point cut in its key interest rate, now at 4%. This cut risks increasing inflation without boosting investment.
Because the prices are stubbornly high at the till. If you have vote Donald Trump to preserve your purchasing power from inflation, you know now : you have been fucked !
And it’s just the beginning. The trade war unleashed by Donald Trump on the world has not yet translated into prices skyrocketting in the United States. Perhaps because American companies preferred to reduce their margins to absorb the rising costs. Or because they had stockpiled before the tariff increase. These stocks will soon be depleted and margins will have to recover. American companies are in a watershed.
But when the $3,500 copper bathtub imported from India will increased to $5,000 because the government (which is the only one getting rich in this story) imposes a 50% tariff on it, what do you do as a customer ? You do like the poor, you fall back on the second quality and buy the polypropylene bathtub. And the American importer of copper bathtubs made in India is very likely to disappear if he no longer finds customers.
In the most visited supermarkets—Kroger, Walmart and Target—you can no longer find a package of coffee for less than $10, a result of a price increase of more than 20% in one year, largely due to the unfair tariffs imposed on Brazil. The Axios website confirms the initial signs : meat prices have increased 16% in one year, and while fruits and vegetables have still only increased by 2.3%, the price of apples has climbed by 9.3%, an increasingly obvious consequence of the flight of seasonal agricultural workers, hunted by federal immigration enforcement agents.
That’s the same for everything imported and if Scott Bessent hasn’t understood this rule, he is a donkey. The tariffs will impoverish the country (that means YOU, the consumer) enormously. But not the treasury, which is collecting the tariffs. Donald’s argument is to claim that this is only the first half. In the second half, investment picks up in the United States, as with the promises of tech tycoons. But they don’t make copper bathtubs. That’s not their field. And besides, around the table, it’s easy to throw a figure. On the ground and very QUICKLY, you have to find cheap money (thanks the Fed…) and the skills. Who sometimes are foreigners workers, not America first’s labor force.
Tariff policy is a short-term policy, an executive order (legal or not) and hop ! it’s done. Industrial policy is a long-term policy, it tooks years to build a plant and recruit skilled workers. When you confuse the two type of terms in macroeconomics, like those donkeys Scott Bessent or Donald Trump, you’re going to crash the economy to the brick wall. But they won’t be able to deny the desastrous political impact of theirs measures for much longer.