Patriotism is becoming a significant aspect in the strategy to control inflation in the US, according to economic advisor Kevin Hassett, who noted that Americans are increasingly preferring local products amidst rising tariffs.
Patriotism and Consumer Behavior
Kevin Hassett stated that data show an increase in patriotism among American consumers. In an interview with CNBC, he mentioned that this shift in buying habits helps alleviate the expected price increases due to tariffs. Hassett argued that prices on imported goods actually fell between December and May, during which new tariff measures were implemented.
Market Response to Tariffs
Despite the threat of tariff increases, markets remain steady. On Monday, Trump announced that the US would impose 30% tariffs on goods from the European Union and Mexico starting August 1; however, investors remain calm. Market indices such as the Dow Jones and S&P 500 showed slight increases, suggesting that market participants expect possible reductions in tariffs during negotiations.
Criticism from Economists
Some economists, including Ernest Tedeschi from Yale's Budget Lab, criticized the White House's assessments, claiming that the methodology used in the reports understates the tariff impacts on import indices. He also noted that recent data shows that import prices have actually increased since March, when the new tariffs took effect.
Thus, Hassett's approach to patriotism as an inflation control strategy remains controversial among economists. While the market responses have been positive, existing tariffs may still lead to higher prices in the future.
