"Trump’s Tariffs: A Cure for Inflation or a Costly Gamble?"

Mar 07 2025

On the Mar 05 John Oakley show on AM 640  

Dan Mcteague,(President for Canadians for Affordable Energy (CAE))  in Canada mentioned he had heard through the grapevine that Donald Trump's real goal might be to actually manipulate interest rates.

He's doing this because The Fed has been trying to do that and has gone as far as they can go but still having a tough time getting it in check.

Generally as the unemployment  rate rises, inflation will come down and thus interest rates will eventually drop.

So through 

1)starting a trade war

2)focusing on paying down the deficit

3)laying off federal workers

4)reducing spending both at home and abroad like in ukraine

The top 3 would all directly increase unemployment rates. The unemployment report that came out this morning showed a 4.1% increase up from 4.0% in Janurary. So a modest uptick.

When you first look at it, it seems like Trump is actually increasing prices especially from the tariffs but if it does play out the way he's anticipating then it will work out better in the long run for American's.

The alternative is if the tariff plan doesn't work then and it creates a fullblown recession which some economists like Robert Fry have said recently.

His other plans to reduce inflation include

1. Deregulation: The administration aims to reduce regulations across various sectors, particularly in energy and housing, to lower production costs and, consequently, consumer prices.

   thedailyguardian.com

2. Energy Production: By increasing domestic energy production, especially oil and gas drilling on federal lands, the administration seeks to lower energy costs for consumers.

   thedailyguardian.com

3. Tax Cuts: Proposals include reducing corporate tax rates from 21% to 15% to incentivize domestic manufacturing and potentially lower consumer prices.

   m.economictimes.com

4. Tariffs on Imports: The administration plans to impose a 10%-20% baseline tariff on all foreign imports, with a 60% tariff on imports from China, aiming to boost U.S. manufacturing.

   nerdwallet.com

5. Immigration Policies: Plans to deport unauthorized immigrants and restructure immigration laws are intended to address labor market dynamics and wage pressures.

   nerdwallet.com

However, experts caution that some of these measures, particularly broad tariffs and strict immigration policies, could lead to higher consumer prices and labor shortages, potentially exacerbating inflation rather than mitigating it.