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Old 05-08-2018, 03:43 PM
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Tariffs increase prices, and therefore are inflationary (i.e., they cause the CPI to go up). But what's important to keep in mind is that it isn't financial inflation in the sense that it demands a financial policy response. For example, tariffs wouldn't generally be a reason for the Federal Reserve to increase rates in response, the way they would for broader price inflation. It doesn't indicate an ongoing trend.

Originally Posted by Retroit View Post
We had high tariffs from 1789 till about 1950. How was inflation during that time period?


Other than the wars (1812, Civil, I and II), low or negative inflation.
There were also other factors at play, such as a limited monetary supply due to the gold standard. Tariffs are just a one-time impact, e.g. if you add a 20% tariff/tax to all goods it will increase prices by 20% (plus multiplier effects, etc.) immediately, but not by another 20% each following year. So the long-term inflation rate isn't really impacted.

Also, historical inflation was a lot more volatile than you're implying in your summary.
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