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NickB79

(20,164 posts)
Sun Nov 16, 2025, 07:56 PM Sunday

Fed researchers say tariffs actually lower inflation -- because they're demand shocks that slam employment and economy

https://fortune.com/2025/11/15/tariffs-inflation-demand-shock-unemployment-economic-activity/

In a working paper published on Thursday, San Francisco Fed researchers Régis Barnichon and Aayush Singh said higher tariffs lead to reduced economic activity, higher unemployment and lower inflation in the short term.

“The inflation response goes against the predictions of standard models, whereby CPI inflation should go up in response to higher tariffs,” they wrote. “Instead, tariff shocks appear to act as aggregate demand shocks—moving inflation and unemployment in the same directions.”

One possible explanation is that tariffs create uncertainty that hits consumers’ and investors’ confidence, depressing economic activity and putting downward pressure on inflation, according to the study.

Alternatively, tariffs could trigger a drop in asset prices that also weigh on demand, resulting in higher unemployment and lower inflation.
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Fed researchers say tariffs actually lower inflation -- because they're demand shocks that slam employment and economy (Original Post) NickB79 Sunday OP
...., MarineCombatEngineer Sunday #1
Sounds to me like the typical MAGA B.See Sunday #7
Yep, MarineCombatEngineer Sunday #9
Did they pull that out of Don the Cons ass? Autumn Sunday #2
Pull what? The gist is that tariffs lower inflation by causing a recession NickB79 Sunday #6
If it comes from anyone in this administration I believe there is an angle to it. For them. Autumn Yesterday #18
The Internets don't do nuance, reading, or thinking very well Stacey Grove Yesterday #21
Perhaps they did. After removing B.See Sunday #8
Did you read what they said ? That are saying it wo cause worse problems JI7 Sunday #14
If it comes from anyone having anything to do with this administration I'm not believing a word they say. Autumn Yesterday #19
And they cure cancer and BOSSHOG Sunday #3
What BS PJMcK Sunday #4
To extent inflation is caused by too much spending, higher prices-- from tariffs -- would tend to reduce inflation Silent Type Sunday #5
Translation: recessions, job losses, reduce demand, which reduces inflation surfered Sunday #10
I can hear trump spinning the value of deflation. Silent Type Sunday #11
So the Trump tariffs are helping bring on the "Trump recession"!--- Jack Valentino Sunday #12
Went to the article to try and get reasoning (aka looking to call out B.S) FHRRK Sunday #13
I don't think this is pro-trump or surprising genxlib Yesterday #15
I don't think this is protrump or surprising genxlib Yesterday #16
I Actually Concur ProfessorGAC Yesterday #17
I wouldn't want these two idiots as my financial advisors. Emile Yesterday #20

B.See

(7,332 posts)
7. Sounds to me like the typical MAGA
Sun Nov 16, 2025, 08:45 PM
Sunday

reich wing talking points, spin, and bullshit trickle down batshitery.

Sort of like arguing how mass deaths from Covid "culled the populace and strengthened 'herd immunity.'"

NickB79

(20,164 posts)
6. Pull what? The gist is that tariffs lower inflation by causing a recession
Sun Nov 16, 2025, 08:29 PM
Sunday

This study is saying that lower inflation only comes from a cratering economy.

Autumn

(48,658 posts)
18. If it comes from anyone in this administration I believe there is an angle to it. For them.
Mon Nov 17, 2025, 09:17 AM
Yesterday

They can tell me the sky is blue and I will 100 % believe it isn't. Until I hear it from someone that I trust I'm going to say bullshit.

Stacey Grove

(116 posts)
21. The Internets don't do nuance, reading, or thinking very well
Mon Nov 17, 2025, 09:27 AM
Yesterday

You did not submit your post in proper "RAH RAH RAH SIS BOOM BAH" Us vs. Them format.

JI7

(92,980 posts)
14. Did you read what they said ? That are saying it wo cause worse problems
Sun Nov 16, 2025, 11:11 PM
Sunday

and lead to recession.

Autumn

(48,658 posts)
19. If it comes from anyone having anything to do with this administration I'm not believing a word they say.
Mon Nov 17, 2025, 09:19 AM
Yesterday

Last edited Mon Nov 17, 2025, 12:10 PM - Edit history (1)

There is always an angle for the Con and his crew.

PJMcK

(24,429 posts)
4. What BS
Sun Nov 16, 2025, 08:03 PM
Sunday

Tariffs are self-defeating.

It’s also illegal for a president to impose tariffs. That is Congress’ job.

Trump is a criminal.

Silent Type

(12,022 posts)
5. To extent inflation is caused by too much spending, higher prices-- from tariffs -- would tend to reduce inflation
Sun Nov 16, 2025, 08:27 PM
Sunday

at the cost of all that other chit like unemployment.

surfered

(10,339 posts)
10. Translation: recessions, job losses, reduce demand, which reduces inflation
Sun Nov 16, 2025, 08:48 PM
Sunday

You’ll have real price decreases with a depression.

FHRRK

(1,314 posts)
13. Went to the article to try and get reasoning (aka looking to call out B.S)
Sun Nov 16, 2025, 11:06 PM
Sunday

Quit after 1st paragraph

A new study that examined 150 years of tariffs in the U.S. and abroad found they disrupt the economy and financial markets so much that the result is lower inflation.


Of those studied, how many were all encompassing? That is all products from all Countries. That is a HUGE difference from targeted tariffs on certain products. It also is not very representative due to changes in global economics.

For example what does a tariff in the early 1900s on lumber effectively tell us about current tariffs on Canada. I’m sure in 1910 we could easily meet all lumber needs by clear cutting in the Pacific Northwest and Great Lakes region. Canadian lumber would likely put a downward pressure on US lumber, thus lower costs because many tariffs were protectionary.

So what happened 100 years ago, on specific items is a great deal different than across the board tariffs today.

I bet the majority of people had limiting understanding of Supply Chain prior to COVID. I actually have a Degree in Supply Chain from 40 years ago, I think there was three colleges that had a Supply Chain program in the 1980s.

Hell we didn’t have an interstate Hwy system until well into the 1960’s so manufacturing was regional with almost all goods required coming from the same region. Economic air shipments of goods was in the 1970’s and 80’s, (and usually required mgmt signoff) Effective and timely communications across Oceans, the 90’s and 2000s. (Realistically not until about 2005)

Comparing the 1920s to 2020s is ignoring so many factors. Would be akin to comparing my Grandmothers opportunities (born in late 1890s) to my daughters opportunities. (born in 1990s)

genxlib

(6,038 posts)
15. I don't think this is pro-trump or surprising
Mon Nov 17, 2025, 07:26 AM
Yesterday

Anything that slows down the economy and curtails spending slows down inflation

It is akin to using higher interest rates to slow inflation because it slows investment, and borrowed spending. But the Fed does that strategically whereas this is just an unintended consequence of an erratic and dumb policy

genxlib

(6,038 posts)
16. I don't think this is protrump or surprising
Mon Nov 17, 2025, 07:28 AM
Yesterday

Anything that slows down the economy and curtails spending slows down inflation

It is akin to using higher interest rates to slow inflation because it slows investment, and borrowed spending. But the Fed does that strategically whereas this is just an unintended consequence of an erratic and dumb policy

ProfessorGAC

(75,248 posts)
17. I Actually Concur
Mon Nov 17, 2025, 08:16 AM
Yesterday

But, it's not painting a rosy picture economically.
That's the part I agree with.
It causes contraction which, of course, is bad.
It causes unemployment due to lower demand. Also bad.
The lid it puts on inflation is completely logical. But, that doesn't make it a positive.
The leverage tariffs have on inflation is a secondary outcome & not a good reason to apply them, especially as broadly & chaotically as they've been applied this time.
Surgically applied, narrow tariffs have had some positive effects. Carpet bombing the world economy with tariffs, not so much.

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