Breitbart Business Digest: Why Tariffs Do Not—and Cannot—Cause Inflation

Cato Comes for Kudlow on Inflation and Tariffs

The notion that tariffs cause inflation has become a super-virus infecting the minds of President Trump’s critics, seemingly immune to the usual antibiotics of economic evidence and logic.

The latest outbreak comes courtesy of Norbert Michel and Jai Kedia of the Cato Institute, who argue that tariffs reduce the supply of goods and therefore drive up prices, resulting in inflation. They further suggest that Larry Kudlow, in a recent “riff” segment on his Fox Business show, is misapplying Milton Friedman’s theory that inflation is always a monetary phenomenon. But their argument is more a display of ideological hostility to tariffs than persuasive economic reasoning.

Readers of the Breitbart Business Digest are likely well-vaccinated against this

Continue reading