Trumponomics Is Trump Right About the Fed Getting It Wrong?
Jul 24, 2025
Oren Cass, founder of American Compass and author of *The Once and Future Worker*, and Anna Wong, chief US economist at Bloomberg Economics and former Trump administration official, dive into the intricacies of the Federal Reserve's policies. They question whether Jerome Powell has misjudged inflation risks tied to tariffs, debating the effectiveness of interest rates amid trade tensions. The duo highlights the ideological divides in economic thought on tariffs, reflecting on their impact on consumers and businesses, while hinting at the need for clearer economic dialogue.
AI Snips
Chapters
Books
Transcript
Episode notes
Tariffs Not Inflationary By Nature
- Tariffs cause a one-time price increase but do not create ongoing inflation that requires monetary policy reactions.
- Economists often oppose tariffs ideologically, skewing their inflation analysis politically rather than economically.
Fed's Shift on Tariff Inflation
- The Fed's newer concern is that tariffs on intermediate goods reduce productivity and cause persistent inflation.
- This contrasts with past views where tariffs led only to short-term price shocks without lasting inflation.
Consumer Expectations Drive Inflation Risk
- Consumer expectations about inflation can create self-fulfilling inflationary spirals, complicating Fed policy on tariffs.
- The Fed risks entangling monetary policy in political rhetoric rather than focusing on economic fundamentals.
