Trump and Inflation

If there is a simple political truth, it’s that voters hate inflation. If there’s another, it’s that they also hate the policies that snuff it out.

Donald Trump’s 2024 presidential campaign highlights the tensions between these two truths. The former president has blasted President Biden for the rise in prices over the past few years. But Trump also criticizes high interest rates — the Federal Reserve’s key tool for lowering inflation. And the second-term agenda he is proposing contains few policies that economists believe would reduce inflation.

In fact, some would risk pushing prices higher.

Those include higher tariffs, which could raise costs for American consumers. Trump has also pledged to deport many undocumented immigrants, which could cause labor shortages that lift prices on food and other items. And while Trump has not laid out his plans in sufficient detail for economists to judge how his agenda as a whole would affect inflation, there’s little to suggest that his policies would stamp out price increases.

“I certainly don’t think it’s a disinflationary agenda,” said Michael Strain, director of economic policy studies at the conservative American Enterprise Institute.

Inflation solutions?

The White House is not primarily responsible for controlling inflation. That’s the Fed’s job. The central bank uses interest rates to keep inflation low: Higher rates can cool the economy and bring down prices, and vice versa. Fed officials make decisions independently of a president’s administration.

But government taxing, spending and regulatory decisions can influence how quickly prices rise, partly by stoking — or slowing — demand. Research suggests that pandemic relief packages contributed to the recent inflation burst by elevating consumption, for instance.