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Trump Risks 'Pain' of Inflation, Which Finished Biden

President Trump may be feeling the need to explain to his voter base what he is doing economically. In a Truth Social post after Canada announced a counter-tariff of 25%, primarily on agricultural products from America, and Mexico announced it had “prepared” tariffs on both agricultural and industrial goods, President Trump said that “This will be a golden age of America,” but that “there will be some pain—maybe, maybe not…. But it will all be worth the price that must be paid.” Given that the great majority of Americans don’t know why Trump is putting tariffs on these countries, it is striking to admit they may impose economic pain on those Americans.

The impact of inflation on Americans is generally thought to have given him the election over Biden; so this invitation for inflation is provocative and risky for Trump. The Wall Street Journal reported that Capital Economics forecast 3.2% general CPI inflation for 2025 with the new tariffs; such forecasts are usually a shadow of the reality following. The tariffs, if not bargained away, are likely to raise the prices of cars and automotive systems (Mexico); oil (Canada); lumber (Canada); computers and phones (China); etc.

Canada and Mexico are threatened with significant economic damage, being very dependent on U.S. trade. Both nations’ currencies have been falling for some months in anticipation. For the United States, both the claimed huge income boost to the Treasury from tariffs, and the inflationary effect, will be delayed because there has been a marked buildup of inventories by U.S. importers in the fourth quarter of 2024, anticipating these tariffs.