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n. Illinois | The SF FED did a study of Tariffs over the last 150 years looking at US GB and France.
This is what they found
Researchers at the Federal Reserve Bank of San Francisco examined major tariff changes from 1870 through 2020 across the United States, the United Kingdom, and France. Their conclusion challenges the conventional wisdom that dominated economic policy debates in recent years: when countries raise tariffs, prices actually fall, not rise.
“We find that a tariff hike raises unemployment and lowers inflation,” the authors, Régis Barnichon and Aayush Singh, write in their working paper released this month.”This goes against the predictions of standard models, whereby CPI inflation should go up in response to higher tariffs.”
The finding arrives at a politically charged moment. As the Trump administration has implemented tariff increases averaging 18 percent on U.S. imports in 2025, mainstream economists warned of a significant inflationary spiral. The Federal Reserve officials have repeatedly said they have hesitated to cut interest rates because they expect tariffs to push up prices.
More recently, several Fed officials have said that they think the central bank should not cut interest rates further due to what they believed would be inflationary pressures from tariffs.
But the historical evidence suggests those concerns may have rested on shaky theoretical foundations not backed by evidence.
HMM maybe its not so clear cut. Maybe the Conventional thinking about what happened in the 1930's was wrote to hide the actual policy of the Federal Reserve in the 1930's which actually shrank the money supply and allowed small banks to fail do to depositor runs that where the result of the attempt to tax check writing and red blooded Americans telling them no way and started pulling their cash out and the Federal Reserve actually not doing what their only true function is which is to be the lender of last resort to the banks which actually own it. The Silicon Valley Bank failure in 2023 was due to this very thing. The Federal Reserve knowing full well their mismatch assets and liabilities did nothing to help them when the deposit run occurred. They had plenty of T-bills to pledge but the Fed couldn't pull it off in a timely manner because the paper work was to convoluted to complete timely IE the house is on fire but the fire department refuses to come out because you forgot to sign and initial paragraph 1c in subsection 25 on page 200. So your house is burnt to a crisp. This is how the Fed works in real life folks. | |
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Rollback of some tariffs
