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Trump’s Tariffs May Complicate Efforts to Tame Inflation
(May?)
"Federal Reserve officials are closely watching the levies, given the expectation that such policies could lead to higher prices.
Federal Reserve officials are keeping close tabs on the tariffs the Trump administration announced Saturday, given the expectation that such policies could lead to higher prices, at least temporarily.
The central bank is especially wary after wrestling with a surge in prices following the pandemic. Inflation haseased back down toward the Fed’s 2 percent targetafter it raised interest rates aggressively in recent years and kept them at high levels, but central bankers remain alert to anything that could stall progress toward that goal.
The Fed has historically tended to look past or not react to changes in trade policy, considering them one-off adjustments in prices rather than potential sources of persistent inflation. Tariffs tend to dent growth in the longer run as well, as businesses retrench and consumers offset rising prices in certain goods by cutting back on spending in other areas.
In 2019, those dynamics prompted the Fed to lower interest rates as a pre-emptive move against a weakening economy. Officials now aregrappling withwhether to use that playbook once again.
Austan Goolsbee, the president of the Chicago Fed and a voting member on this year’s policy-setting committee, articulated the dilemma on Friday, just days after the Fedput further interest rate cuts on iceas it adopted a wait-and-see approach until it had more clarity on Mr. Trump’s plans.
“The difficulty we’re going to have here, in this near period, is if collectively policy is going to be raising prices, we’re going to have to figure out which part of the inflation is the part that monetary policy should look through and which part is a sign of the economy,” he said in an interview with CNBC.
“Our signal is getting a little muddied, when things are happening that drive up prices.”
"Canada, Mexico and China account for more than a third of the products brought into the United States. Tariffs could lead to higher prices for consumers.
Most economists expect fresh trade barriers to raise prices for U.S. businesses and households, which could lead to a temporary burst of higher inflation.Adam Amengual for The New York Times
President Trump on Saturday signed executive orders imposing sweeping tariffs on the country’s three largest trading partners, a move that risks unleashing a damaging trade war.
Trade wars were a feature of Mr. Trump’s first term in the White House, too. But his latest tariffs on Canada, Mexico and China, which are set to take effect at 12:01 a.m. Eastern time on Tuesday, may broaden the scale of disruptions. The three countries account for more than a third of the products brought into the United States, supporting tens of millions of American jobs.
Here’s what to know about the anticipated fallout from the tariffs:
How sweeping are the tariffs?
All goods imported from Canada and Mexico will be subject to a 25 percent tariff, except Canadian energy products, which will face a 10 percent tariff, according to the executive orders. The orders also placed a 10 percent tariff on Chinese goods.
The auto and electric equipment sectors in Mexico are most exposed to disruption from sweeping tariffs, as is mineral processing in Canada, according to economists at S&P Global. In the United States, the largest risks are to farming, fishing, metal and auto production.
What should consumers expect?
Some companies may try to pass the cost on to their customers by raising prices. Others may opt to eat the cost of the tariff. Companies may also try to force foreign suppliers to bear the burden by negotiating lower prices for their products.
When Mr. Trump imposed tariffs on China during his first term, economic studies found that most of those costswere passed onto American consumers — a scenario that is likely to play out once again. That could mean higher prices in grocery aisles, at car dealerships and at the pump.
Roughly 60 percent of the oil that the United States imports comes from Canada. Tariffs on Canadian energy, though lower than for other imports, could prompt an uptick in prices at the pump, especially in the Midwest, where refineries turn Canadian oil into gasoline and diesel.
There’s also concern about inflationary pressures across the board. Analysts at Goldman Sachs have said that if Mr. Trump proceeds with across-the-board tariffs, it would both raise prices in the United States and slow economic growth. Most economists expect that fresh trade barriers could lead to a temporary burst of higher inflation.
How long might it take for prices to rise?
Consumers could see a swift uptick in prices for nondurable goods, including groceries. Most of the avocados in the United States are imported from Mexico, and they could become more expensive within a couple of weeks of the tariffs going into effect. Prices for cucumbers and tomatoes might spike, too. It could take longer for prices to rise for durable goods, like cars, thanks to existing inventory, or if companies expect the tariffs to be temporary.
“It could take a little while, but if these tariffs are there to stay, then these price increases are going to come eventually,” said Felix Tintelnot, an associate professor of economics at Duke University.
How quickly firms are willing and able to raise their prices remains to be seen, Peter Simon, an economics professor at Northeastern University, said Saturday. While some price increases may represent a legitimate response to rising costs for businesses, there is also the risk of opportunistic pricing, meaning companies may use tariffs as an excuse to raise prices even more than necessary, Mr. Simon said. An uptick in inflation, he said, is an “unavoidable result” of the tariffs.
How has Mr. Trump explained his tariffs?
After taking office, Mr. Trump said he would impose tariffs on Canada and Mexico because the neighboring countries were allowing “mass numbers of people to come in and fentanyl to come in.” His arguments since Inauguration Day — that punishments are necessary to halt the flow of migrants and drugs into the United States — follow months of similar threats during his presidential campaign.
Mr. Trump issued the executive orders under a law called the International Emergency Economic Powers Act, expanding the scope of a national emergency that he declared on his first day in office with respect to an “influx of illegal aliens and illicit drugs.”
Canada and Mexico have already signaled possible retaliation. The Canadian governmenthas made plans to targetorange juice from Florida, whiskey from Tennessee and peanut butter from Kentucky, while Mexico’s president, Claudia Sheinbaum, has said her country isprepared to respondwith retaliatory tariffs.
“If the United States moves ahead, Canada’s ready with a forceful and immediate response,” Prime Minister Justin Trudeau of Canada said Friday on social media.
Mr. Trump’s executive orders, however, aim to restrict the affected governments’ ability to fight back. The United States might ramp up its tariffs if the countries retaliate by imposing their own import duties or taking other measures, according to a clause in the orders.
Have U.S. companies been preparing?
Ahead of Mr. Trump’s announcement on Saturday, U.S. companiesdid not appearto be in a big rush to bring in shipments from Mexico and Canada, though there were signs of an uptick. Efforts to bring in goods before the tariffs probably contributed to an increase in the transportation of shipping containers across North America by rail in the first four weeks of the year, compared with the same period in 2024.
Data released in the weeks before Mr. Trump’s executive orders on Saturday showed modestly higher freight volumes on road and rail. Transportation experts said that for rail and trucking companies, the situation differed from 2021 and 2022, when a deluge of imports overwhelmed supply chains, causing shipping costs to skyrocket and helping fuel a rapid acceleration of inflation.
Danielle Kaye is a business reporter and a 2024 David Carr Fellow, a program for journalists early in their careers.More about Danielle Kaye"
Amid Trump’s Anti-Diversity Effort, Black History Month Takes on New Meaning
"Feb. 1 marks the first day of Black History Month, and suddenly the study of the Black experience may feel like an act of defiance.
A sculpture of Carter G. Woodson in a Washington, D.C., park last year. Woodson’s dedication to celebrating the historic contributions of Black people led to the establishment of Black History Month.Kenny Holston/The New York Times
Clyde McGrady covers race and identity from Washington, D.C.
Feb. 1 is the beginning of Black History Month, which for decades has recognized the contributions of Black people to American civic life and culture with festive luncheons, serious lectures, profitable merchandise lines and staid White House receptions.
But a month that was officially recognized nearly five decades ago by a Republican president, Gerald R. Ford, is dawning this year with new significance amid President Trump’s furious assault on diversity programs inside and outside the federal government.
Suddenly the study of Black history — or at least the dark corners of slavery, segregation and bigotry — appears to be an act of defiance.
“Black History Month existed long before presidents endorsed it, and it will continue, even if presidents do not,” said Martha Jones, a professor of history and a presidential scholar at Johns Hopkins University. Nonetheless, she added, “there’s a great deal to lament and even to decry” about the suppression of American history.
On Friday evening, Mr. Trump issued a proclamation that announced “February 2025 as National Black History Month,” “by virtue of the authority vested in me by the Constitution and the laws of the United States.”
Adding to mentions of celebrated Black historical figures such as Frederick Douglass and Harriet Tubman, he celebrated two contemporary Black conservatives, the scholar Thomas Sowell and Justice Clarence Thomas, as well as the golfer Tiger Woods.
Notably missing was a more somber mention of the “incredible prejudice and hardship” that African Americans have faced, like the one Mr. Trump included in his 2020 proclamation.
This time, he wrote, “As America prepares to enter a historic Golden Age, I want to extend my tremendous gratitude to black Americans for all they have done to bring us to this moment, and for the many future contributions they will make as we advance into a future of limitless possibility under my Administration.”
But as agencies and departments scramble to respond to Mr. Trump’s ban on “diversity, equity and inclusion,” those sentiments might be in doubt. Federal employees are scrubbing the pronouns out of their emails. Gender identity beyond male and female is disappearing from government websites.
At least one federal entity, the Defense Intelligence Agency, has “paused” recognition of Black History Month. The Air Force even removed a video celebrating the Tuskegee Airmen, a segregated unit of Black pilots who fought in World War II, before restoring it amid an uproar.
Asked how the White House would mark the coming month,Karoline Leavitt, the press secretary, saidon Thursday, “We will continue to celebrate American history and the contributions that all Americans, regardless of race, religion or creed, have made to our great country.” On Friday, she appeared to catch herself when she said more specifically, “The president looks forward to signing a proclamation celebrating Black History Month.”
Every president since 1996 hasissuedan annual proclamation for National Black History Month, according to the Library of Congress.
But this year, as the federal government — the largest employer in the country — scrambles to comply with an executive order that terminates “all discriminatory programs” in the federal government, the month is beginning under a cloud of doubt.
For much of last year’s presidential campaign, Mr. Trump seemed to indicate that the study of the darkest corners of American history — slavery, the Confederacy and Jim Crow laws — should be frowned upon as an undermining of national pride. Now historians say those campaign talking points could become government policy.
“I find it cowardly, the idea that we would shrink from our past,” Ms. Jones said. “I believe we are strong enough as a nation to know that past, to make it part of our histories, to teach it, to read it, to learn it, and to still be a nation.”
There’s an oft-repeated joke among Black people that the celebration of their history was confined to the shortest month of the year, but there is a reason. The monthgrew from “Douglass Day,”which was observed in the 1890s on Feb. 14 — the day Frederick Douglass, an abolitionist and a former slave, celebrated his birthday — in “colored” schools in the Washington, D.C., area. In February 1926, the scholar Dr. Carter G. Woodson started Negro History Week, which built upon Douglass Day and the birthday of Abraham Lincoln, which falls two days before Douglass’s observance.
By 1970, it was Black History Month.
In 1976, Fordbecamethe first president to officially recognize Black History Month, using the highest office in the land to “honor the too-often neglected accomplishment of Black Americans.” In the nation’s bicentennial year, Ford connected the Black struggle for equal rights with that of America’s founding.
“Freedom and the recognition of individual rights are what our Revolution was all about,” he wrote. “They were ideals that inspired our fight for Independence: ideals that we have been striving to live up to ever since.”
Before the efforts of scholars like Woodson to create a canon, American history was dominated by propaganda that was used to deny Black people full citizenship and political rights, said Dr. Kevin Gaines, the interim director of the Carter G. Woodson Institute at the University of Virginia.
History was littered with accounts that soft-pedaled the brutality of slavery, making it seem like a benevolent institution, while films such as “The Birth of Nation” helped fuel violence against African Americans, he said.
The scholarship of Mr. Woodson and others began to change that.
“It challenged those very biased anti-Black narratives that had been the norm in the American historical profession,” Mr. Gaines said. “African American history is at the center of modern American history,” he added. “That point, unfortunately, has to be emphasized in the current political and cultural climate that we’re in.”
Following the Black Lives Matter protests and the racial reckoning in 2020 that sprang from the murder of George Floyd, a backlash took shape. Some states beganbanningwhat they termed “divisive concepts,” for example — as detailed in legislation in Alabama — teaching that a person is “inherently responsible for actions committed in the past” or that a person should “accept, acknowledge, affirm or assent to a sense of guilt, complicity or a need to apologize” based on their race, religion, gender or background. The effort grew into a broadercampaign byconservative activists and academics — one embraced by Mr. Trump — to dismantle diversity and inclusion programs.
But turning away from the thornier parts of American history misses an opportunity to explore the nuances of that history, Ms. Jones said. Even disturbing episodes such as the 1898 racistmassacrein Wilmington, N.C., contains lessons about multiracial democracies being built during the rise of Jim Crow segregation.
“African American history has numerous examples of these kinds of multiracial alliances,” said Mr. Gaines, including the 1960s civil rights movements and the George Floyd protests. Implicit in the intelligence agency’s ban is the notion that highlighting diverse experiences within American history is inherently divisive, or that parts of American history are too uncomfortable for a workplace to confront.
Clyde McGrady reports on how race and identity is shaping American culture. He is based in Washington.More about Clyde McGrady"
