This week in Trumponomics: Somebody else's inflation
Joe Biden seems to be haunting the Trump White House.
After the latest inflation numbers showed an unnerving rise in prices , President Donald Trump posted on social media , "Biden inflation up!"
Biden left office on January 20, and the latest inflation report was for January. So, in a way, it was the final inflation reading of the Biden administration. Trump deserves a grace period.
On the other hand, Trump did say while campaigning last year , "when I win, I will immediately bring prices down. Starting on day one." He hasn't. So Democrats are in his grille, bashing Trump about eggsploding egg prices caused by avian flu and scores of eggsecutive orders Trump has signed having nothing to do with lowering inflation.
It's silly to argue over who's responsible for inflation one month after a new president takes office. Trump didn't cause bird flu any more than Biden did, and any president has far less control over prices than voters like to think.
But Bidenflation vs. Trumpflation is a preview of a more serious problem Trump could face in coming months.
Inflation is getting worse, not better, and Trump can't blame Biden forever. If the trend continues, voters will start blaming Trump for inflation, and one lesson of Biden's presidency is that voters vexed by rising prices can be unforgiving.
The inflation rate dropped from a high of 9% in 2022 to 2.4% last September. It looked like the problem was nearly solved, and the Federal Reserve started cutting short-term interest rates as a sign it expected inflation to settle back near its target of 2% or so.
But since then, inflation has ticked back up, and it's now up to 3%. Prices in a grab bag of categories, including insurance, used cars, airfares, and rent, remain sticky-high. Ten-dollar eggs are the new $5 gasoline , a shocking price for a staple that reminds shoppers of inflation with every trip to the store.
Worse for Trump, consumers expect his economic policies to make inflation worse, not better. As he promised, Trump has made tariffs on imports the centerpiece of his economic agenda, with new customs duties on some imports already imposed and more on the way. Surveys clearly show that Americans expect Trump's tariffs to raise prices . In the University of Michigan's monthly survey, respondents said they expect inflation in one year to be 4.3% , with the outlook getting progressively worse during the past couple of months.
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Something has to give. If inflation is a problem six months from now, hardly anybody is going to think it's Biden's fault. Trump will have to either back away from many of his tariff threats or simply tell voters they're stuck with higher prices.
Trump does have plausible off-ramps for most of his tariff threats. Since he can largely impose them unilaterally, he can remove them unilaterally. During his first term, Trump claimed tariffs were meant to lower the US trade deficit, which created a high barrier for Trump to claim success, given that those trade deficits didn't drop very much.
This time around, Trump has set squishier goals as the purpose of his trade wars, such as help from foreign nations curbing illegal immigration or more favorable terms for US exports. That makes it easier for Trump to declare victory and say tariffs won't be necessary after all.
How long will he wait?
It may depend on how bad inflation gets. Most economists don't think we'll see 9% inflation again anytime soon. Inflation could stay slightly elevated at around 3%, or approach 4% in a downside scenario. It's an open question whether egg prices or some other anomalous shock will have an outsized effect on consumer psyches and convince people inflation is worse than it is. Another variable is that many Americans, after three years of unusual price hikes, have inflation fatigue and are especially sensitive to any further price hikes.
Trump seems confident that inflation won't vex him the way it did Biden. His early actions, instead of battling inflation, focus on deregulation , eradicating cultural sensitivity policies , curbing illegal immigration , and even reviving plastic straws . Maybe Trump thinks voters will forever associate Biden with inflation and him with the cure.
Biden, however, won't be on the ballot in the next election.
Rick Newman is a senior columnist for Yahoo Finance . Follow him on Bluesky and X : @rickjnewman.
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