Trump’s Inflation Promises May Finally Be Catching Up to Him

One of the big ongoing debates this year in both economic and political circles has been whether, when, and how rapidly Donald Trump’s policies, and particularly his tariff program, would boost consumer prices, subjecting him to the same inflation peril that Joe Biden experienced. For months after Trump’s initial “Liberation Day” tariffs announcements, experts tried to explain why inflation statistics were still low. Not many actual economists bought Trump’s own argument that foreign producers and American importers would just pay tariffs out of their own pockets and leave consumers alone. But there have been other explanations, ranging from the wildly gyrating on-again, off-again nature of Trump’s decisions on tariffs, to built-up pre-Liberation Day inventories, to partial validation of the MAGA theory that importers value American markets too much to let Americans fully feel the pain.

However, now there are signs the long-awaited inflationary wave may finally be landing on our shores, as The Bulwark’s Andrew Egger observes:

[An] alarm-bell price report [arrived] yesterday: a 0.9 percent single-month jump in the Producer Price Index, the largest since the bad old inflation days of 2022. That jump pushed PPI 3.3 percent higher compared to this time last year, while “core” PPI—which excludes more naturally fluctuating prices of food and energy—rose all the way to 3.7 percent year-over-year.

In contrast with the Consumer Price Index, which tracks the cost of final goods, PPI tracks costs through every step of the supply chain, including raw material inputs and intermediary manufacturing. PPI and CPI are closely related measures, of course, and ordinarily they track closely together. But the fact that PPI is spiking ahead of CPI right now suggests that economists’ warnings about the costs of tariffs were right. What we’re seeing is tariff-induced upward price pressure on every step in America’s globally integrated supply chains, all while businesses use every trick in the book to delay passing those costs on to consumers. But delay is all they can do; soon, consumers will be feeling the burn too.

If that’s correct, or even half correct, there’s another important mystery to unravel. Polling data has shown Trump getting consistently poor job-approval ratings for his handling of “inflation” and “prices.” According to Silver Bulletin’s polling averages, Trump’s net approval rating on inflation is a horrendous minus 25.5 percent, and it’s been below minus 20 percent since mid-June. Does this reflect anticipatory fears of the inflation we are now beginning to see? If so, it’s possible such inflation has already been baked into assessments of Trump’s job performance, and its actual appearance may not significantly erode his support, assuming it’s limited in size.

But there’s another possibility that could mean big trouble for Trump and his party heading toward the 2026 midterm elections, and Egger notes it as well:

It’s remarkable to ponder the gap between this economic picture and what voters thought they’d be getting with Trump on inflation. Many Americans seem simply to have swallowed his incredibly simplistic campaign pitch of “Biden makes prices go up, Trump will make prices go down.” The fact that they’ve kept going up even modestly so far this year has scanned as a disappointment to many. How they’ll respond to Trump actively making that inflation worse in the weeks and months ahead remains to be seen, but support for his ability to handle the economy only continues to soften. 

Those who focus on inflation statistics may be missing that, which also helps explain why improved inflation numbers didn’t help Biden in the last two years of his presidency: Americans didn’t want prices to rise more slowly, but to actually go back down to where they were before their post-pandemic spike. The fact that general price drops don’t tend to happen without a recession may seem axiomatic to economists, but not to voters being sold a bill of good by Trump. Before long, he may pay dearly in political capital for that particular bit of deception.