Tariffs (2) yea they are inflationary

 to paraphrase Milton Friedman ' tariffs are always and everywhere inflationary'.  

Why?  First there is the 1 time hit of raising prices by the amount of the tariff.  Cars cost X today and 1.25X after a 25% tariff.  Many in the Trump administration are of course idiots and are trying to position this as a one time hit to prices (things costing 25% more), and then no more inflation due to tariffs.  They also claim that the 25% hit will be paid for by foreign companies or governments and be used to pay off the deficit.  This is wrongheaded in so many ways it makes me glitch---but that is an argument for another day.  Regarding the inflationary impact of tariffs, per yesterdays blog post, tariffs will protect businesses from competition and that is what will increase long term rates of inflation.  Protecting companies from global competitors will increase inflation.  Full stop.  If ACDelco doesn't have to compete with LG and other S Korean flat screen producers the new screen in your Jeep will cost twice as much and perform 50% worse.  That is inflation.  And that is bad for consumers.  BAM (aka mic drop).

PS this is a long term cost which financial investors and consumers will be slow to realize, but in a decade when our companies are less competitive than the rest of the worlds you can thank Trump's tariff policy.