During an interview with Bloomberg aired on Thursday’s “Balance of Power,” White House Council of Economic Advisers Chair Jared Bernstein acknowledged that there wasn’t an inflation spike caused by tariffs in the first Trump administration, but argued that things in 2025 are much different from where they were in 2017.
Bernstein said, “I want to give this incoming team the benefit of the doubt. I know some of these folks, they’re good economists, they don’t want to generate higher inflation or higher interest rates, but if you do look at the impact of, say, sweeping tariffs or deportations or fiscal stimulus through unnecessary high-end tax cuts, really also hurting the economy’s fiscal outlook, all of those, of course, are inflationary, and then, if you add in compromising Fed independence, you’ve got a real problem on your hands. I don’t think they want to go there.”
He continued, “I will say the following: If there are those who think that, hey, we did tariffs in our first administration and it didn’t hurt us on the inflationary side, 2025 is a lot different than 2017, right? There, you’re looking at an economy where you were missing inflation from the downside for something like five or ten years. There, you’re looking at an economy where interest rate yields were very low. Now, you’re talking about an economy where inflation is making its bumpy way path back to target, and yields are, if anything, going the other way. This is a very different climate to be considering those kinds of ideas, and I would say, in that regard, they have fewer degrees of freedom. And, again, I think they know that.”
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