Posted on 11/16/2025 4:25:22 AM PST by SoConPubbie
âť“WHAT HAPPENED: A 150-year analysis challenges conventional wisdom on the impact of tariffs, suggesting they lower prices and raise unemployment, contrary to establishment economic models.
👤WHO WAS INVOLVED: Researchers Régis Barnichon and Aayush Singh from the Federal Reserve Bank of San Francisco conducted the study.
đź“ŤWHEN & WHERE: The study analyzed data from 1870 to 2020 across the U.S., the U.K., and France, with findings published in November 2025.
💬KEY QUOTE: “We find that a tariff hike raises unemployment and lowers inflation,” the authors stated in their working paper.
🎯IMPACT: The findings challenge establishment economic models and suggest tariffs may work through demand-side mechanisms, reshaping debates on trade policy.
A major study released by researchers at the Federal Reserve Bank of San Francisco confirms what The National Pulse has long reported, i.e., tariffs are not inflationary and more often than not, have deflationary effects that push prices downward. The analysis, which covers 150 years of economic and trade data from the United States, the United Kingdom, and France, has major implications for how the Federal Reserve and economists understand President Donald J. Trump’s tariff policies.
“We find that a tariff hike raises unemployment and lowers inflation,” the authors, Régis Barnichon and Aayush Singh, write in their working paper released this month. “This goes against the predictions of standard models, whereby CPI inflation should go up in response to higher tariffs.”
Importantly, the study’s findings reveal that tariff shocks operate primarily through aggregate demand mechanisms—affecting confidence, investment, and spending patterns—rather than through the simple cost-push mechanism that trade models typically emphasize. This distinction matters enormously, as it means tariffs can be used as a policy tool without triggering the consumer price spirals that economists have incorrectly warned about for generations. The National Pulse has similarly reported that the most infamous trade levies in American history, the Smoot-Hawley Tariff, had deflationary effects that fed into a larger deflationary event caused by the Great Depression.
The paper raises questions about the Federal Reserve’s response to tariffs, with the central bank’s chairman, Jerome Powell, having insisted for months that it would lead to increased inflation. If the main effects are lower inflation and higher unemployment—a key signal of deflationary demand destruction—monetary theory suggests that the Fed should cut interest rates when tariffs are imposed. Instead, the Fed largely held interest rates steady, only moving to slash borrowing costs in September despite President Trump correctly pushing for rate reductions since March.
Bkmk
Wow, it's as if the Fed has discovered economic substitution and indifference. /s
bkmk
healthy sarcasm
;)
For at least 40 years, it has absolutely galled me that the "free trade builds wealth" meme has ignored the absolute right of particularly a small nation to protect its ability to defend itself by sustaining various elements of its military and economic supply chains. It's as if the Hayek and von Mises crowd had never heard of predatory behavior among nations or considered it as an economic externality.
It says two things, we can't just focus on one:
1: lowers inflation
2: raises unemployment
These guys are clowns. Monetary Inflation is just phony baloney currency printing by those who own the printing press. The price of everything in the natural order of economics tends to go down over time. Not up! They are stealing your purchasing power, the value of your savings.
Tariffs, and the cost of things, are due to supply and demand, labor costs, transportation, etc. Apples and oranges, hell, Apples and aircraft carriers.
Tariffs are a tool, not an end to themselves. America needs to make things people want to buy. The government needs to live within its means. A favorable balance of trade. Note well this went negative in 1974 and has been in the red ever since. The government borrows or prints the difference. That’s why they are 38 Trillion in the hole.
Wages have been stagnant since 1974 as well. America has been hollowed out, robbed, and running on fumes for decades. 90 million on various forms of “welfare” - SNAP, EBT, WIC, and probably a few other alphabet programs I’m unaware.
Tariffs may indeed help certain industries return to our shores. There is no way around this. “Export or Die”
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