On Wednesday, Breitbart posted an article about the erroneous reporting on the impact of the Trump tariffs. As we are watching manufacturing return to America (something the Democrats claimed could never happen), some of our talking heads are screaming that the tariffs are causing inflation. Wait a minute. The annual inflation rate reached a high of 9.1% in June 2022, before gradually declining to around 3.7% by 2024. The current rate is slightly lower than 3%. Where were the tariffs in 2022?

The article reports:

The New York Fed has posted yet another paper by Mary Amiti and a team of economists on the costs of tariffs. It’s widely being read as showing that tariffs have pushed up consumer prices, with many reports claiming that goods inflation ran 2.9 percentage points higher because of tariffs.

In reality, however, the paper shows no such thing.

In the first place, the paper does not show and does not even claim that tariffs pushed up overall inflation by 2.9 percentage points. Its sample covers just 20 percent of the consumer basket. Translate the estimate into a contribution to overall consumer prices and you get roughly six-tenths of a percentage point, before accounting for anything happening elsewhere in the economy.

The article concludes:

But even when it comes to the limited findings about tariff pass-through to consumer prices, the Fed researchers render independent scrutiny impossible. Have they measured the right product categories? We cannot know because the paper does not list the 67 goods categories included in its consumer-price sample or their individual weights. It explains how the basket was constructed, but readers cannot examine which goods were included, which were omitted, and whether those choices materially affect the result. We’re just supposed to trust them because they’re Fed economists, and they would never make a mistake or willfully construct a basket of tariffed goods that advance the view that tariffs push up prices.

The Liberty Street Economics post about the paper acknowledges that its method cannot establish how much of the broader price movement was itself caused by tariffs. But it then declares that without tariffs, goods prices would have fallen slightly. But even the paper’s note on its own chart says the contribution is illustrative rather than an absolute contribution to aggregate goods inflation.

The Fed has produced a small library on tariffs and prices. This paper alone cites work from seven corners of the Federal Reserve System. You might reasonably conclude that the Fed—which let inflation under Biden rise to the highest level in 40 years—is obsessed with showing that tariffs are no good, very bad policies that hurt consumers.

But after all that research, even the roughly six-tenths contribution to overall prices only amounts to an estimate that doesn’t take into account how the market and consumers reacted to higher prices.

You can make statistics say pretty much anything you want them to if you know how to manipulate numbers! Before 1913, the American government was paid for entirely by tariffs–there was NO income tax.