Trump’s Tariffs: Because Why Not Inflate Prices While Deflating Expectations?

Hold onto your wallets, folks! It seems that the return of Donald Trump to the political limelight is about to throw our fragile economy a curveball shaped like a giant 60% tariff bat. According to Tim Adams from the Institute of International Finance, this is bound to send inflation scuttling back like a cockroach when the lights come on.

Adams shared with CNBC’s Karen Tso that with these tariffs, we could soon see inflation and interest rates rising faster than your great-aunt’s blood sugar after a Halloween candy binge. “You can argue, is it a one-time hit, or are we in for a wave? It really hinges on how countries retaliate, but there’s no debate – it’s definitely going to throw a wrench in our attempts to untangle this inflation mess we’ve been trying to work through,” he said, optimistically.

As it stands, Trump is all in on these universal tariffs, ready to slap them on like a teenager does with an overbearing sunscreen on a beach trip. We’re talking a 20% tariff for everyone, fiesta-themed tariffs on Mexico with cars sporting a whopping 100% fee, and throw in a generous helping for any nation daring enough to look at the U.S. dollar sideways. So much for diplomatic relations, right?

In a rousing defense of these economic wonders, Trump proudly declared that higher tariffs are the secret potion to lure companies back to the good ol’ U.S. of A. “The higher the tariff, the more likely companies are to plop down a factory here to dodge the fee,” he explained, as though America was running a factory special on BOGOs.

Let’s not forget, in his magical worldview, tariffs are not inflationary because… well, they just aren’t! It’s like how calories don’t count after 8 PM, right? But analysts, those pessimistic party poopers, are busy waving red flags, warning that this grand proposal could help inflation surge like a caffeinated rabbit.

Just to set the economic mood, U.S. inflation stood at 2.4% in September, down from a jaw-dropping 9% in June 2022. Thanks to pandemic supply chain chaos, we were riding a rollercoaster of fiscal stimulus that would make even a theme park shrink in fear. And because the Federal Reserve loves to party, they kicked off interest rate cuts not with a gentle lullaby but with a celebratory half-percentage-point reduction, all while still worrying about inflation like a mother hen.

As Trump’s potential presidency reignites, the world seems to be staging an economic game of Jenga, where every piece is a tariff and one wrong move could send trade relations tumbling into chaos. The European Union just voted to impose tariffs on Chinese electric vehicles because, apparently, nothing screams “friendship” like a stiff import fee.

Adams remarked that both Trump and Kamala Harris are running as “change candidates,” proving that voters are either craving something new, or just tired of selecting the lesser of two evils on the menu of democracy.

Adams cautioned, “With Trump, there’s a lot of talk about isolationism and protectionism. It’s like he’s set up a giant ‘Do Not Enter’ sign around us. Meanwhile, Harris is busy sending friendship bracelets to international organizations,” showcasing a refreshing dose of optimism by suggesting we could play nice with the world again.

CNBC has reached out to the Trump campaign for a response, though we suspect they might just respond with a whole lot of tariffs wrapped in a bow.

— CNBC’s Rebecca Picciotto contributed to this satirical reprieve from the atrocities of inflation.