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So here's the likes this this morning. Tariff's casting down on further FED easing. Bloomberg Economics predicting the levies could add about zero point seven percent to core inflation. Joining us now to discuss as the former sen Lewis FED President Jim Bullard, Jim, Welcome to the program, sir. So the FED chair wants to wait to see the policies to be articulated, and I think it's fair to say
they have been over the weekend. So Jim, from your perspective in your time at the FED, once they've been articulated, did you just assume that they stay?
Yeah. I mean this is one salvo in the trade war, and I think there's much more to calm in various directions.
This is mostly based on.
The fanmol issue and the immigration issues.
So it does seem like the three countries that are effected.
Could take actions on those dimensions and this phase would get ended. But obviously, the the president campaign on a trade war, and I think you know, there's far more uncertainty in the future.
How much of a template Jim is twenty seventeen, twenty eighteen in terms of the inflationary impact of Trump's tariffs to now when there are more goods being tariffed, but also there is a greater degree of inflation already basins the system.
Yeah, I think the last one from twenty eighteen to twenty nineteen was the GDP effect, and blanket tariffs across the board of twenty five percent, which were met by other countries, would have.
A big impact on GDP, and I think that would dominate everybody's thinking about the inflationary impacts. If they're there at all, would be a one time effect, it would be relatively minor.
And that's what happened in twenty nineteen.
The economy slowed down precipitously and the FED actually reduced rates, and I advocated.
For that at that time as the right response.
Back in twenty eighteen twenty nineteen, I knew what the begl would cost me. I knew how much gas was going to be. I had a sense of what prices were. Now people don't have as much of a sense of where prices are to that same sort of granular degree. Do you think there is that risk that companies have the ability to pass along price increases in a much more direct and consistent way because of how conditioned people are post pandemic.
Yeah, I mean tariffs at this level are you have to think about them a little bit differently. I mean, you go into the bar and there's a bunch of beer for sale, and the Canadian beer costs three times as much as all the others.
I suppose you're.
Going to buy one of the other ones and maybe not buy the Canadian beer.
So I think.
Prohibitive type tariffs just shut down train altogether. I think for the cars as well, maybe it's not a good time to buy a car if it's going to cost three.
Thousand dollars more, six thousand dollars more. The kinds of numbers.
People are taught using around here, they can delay those types of purchases. So there's all the substitution that occurs with terrorists at this level.
Trump is also talking about putting tariffs on the European Union.
So can you view this as a one off.
Increase in price level or because he's talking about more tariffs warning other countries that tariffs are coming down the pipeline, do you see this as an ongoing inflation threat?
Yeah, I mean one way.
So, first of all, this order is about the national emergency on fed meal and immigration. But if you just want to argue the economics, let's say, with the EU, then I think what's the response to the EU going to be? A simple response would be for them to lower their tariff level to the average tariff level of the US. That would make a lot of sense. These are both big economies. I don't see why the average tariff level has to be all that different between the two.
Places, and that's something that the President has.
Argued for, and it seems like maybe now is the time to think about that. Why not have the same ariage STAREF level in the two places.
Jim, is there any reason why the Federal Reserve wouldn't just look through any short term inflation shock, any reason to believe they'd be nervous about second order effects in this building?
Yeah? I think you know, as we've talked about many times, inflation expectations are a critical thing.
That happened going up a little.
Bit to your tips, up a little bit, So I do think that's a little bit concerning. But as I say, I mean, the last one from before was that the growth effects are large or can be large, and that would tend to dominate any one time increase in the place level.
Hey Jim, I appreciate your time as always. Jim pulled out that the former Saint Lewis fed president