Chicago Booth Review Podcast Trumponomics: Expect higher inflation—with or without tariffs
Feb 5, 2025
Michael Weber, a Chicago Booth researcher focusing on consumer behavior and tariffs, discusses the intriguing impacts of Trumponomics. He reveals how consumer expectations of rising prices are reshaping shopping habits and driving inflation. The conversation touches on the parallels between tariffs and sales taxes, leading to misconceptions that prompt stockpiling. Weber also highlights the tension between the Trump administration and the Federal Reserve, as they navigate the delicate balance between domestic job growth and inflation control.
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Tariffs and Inflation
- Tariffs act like a sales tax, increasing import and domestic good prices.
- Consumers, anticipating this, hoard goods, which will likely raise inflation.
Consumer Reactions to Tariffs
- Consumers are changing their behavior due to expected tariffs.
- They are stockpiling goods and cash, anticipating price increases.
Consumer Savviness and Tariffs
- Consumers understand tariffs will increase prices, contrary to some narratives.
- Domestic producers may raise prices due to reduced competition and increased input costs.