As the threat of more tariffs continues to be thrown around, Americans are growing worried about what that might mean for their wallets. However, Kristina Hooper, Chief Global Market Strategist at Invesco, joins TheStreet to explain why tariffs shouldn’t pose a threat to inflation.
Transcript:
Kristina Hooper: Well, the only guide we have is the previous tariff wars and the first Trump administration. And what we saw there was that prices for manufactured goods went up. It impacted manufacturers. Prices went up modestly for consumers to a certain extent. But at the end of the day, as soon as tariff wars were over, prices adjusted or pretty soon thereafter. So there wasn’t a dramatic impact during it. And it was very, very brief. So, you know, history, it doesn’t repeat itself, but it often rhymes. And so I would anticipate we’d see something similar where we could see some increase in prices. Maybe some of it gets passed along to consumers, some doesn’t. But at the end of the day, it becomes irrelevant because it’s not sustainable inflation. So long as those tariffs come off and some of them could just be threats as part of a negotiation tool, I think then it’s really a very short blip and we move on.
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Conway Gittens: So one of the things though, as you mentioned history that’s different from this time than last time, is that the last time we weren’t in an inflationary period right now, every dollar counts, right? Every little tick hurts. So if the consumer and even producers are going to see higher prices, isn’t that going to have an impact?
Kristina Hooper: That’s a fair point. But where we’ve seen inflation, where the sticky inflation has been recently is not on the good side. We sort of went through our goods inflation phase during the pandemic, but once the economy reopened then it was a focus on services spending. So I’m not too concerned. In fact, that’s why I think immigration could be a bigger issue if you see mass deportations and sort of a shrinking of the labor pool, especially in certain industries, I think that could be more problematic. And unlike tariffs, it can’t be quickly pulled off. Once you’ve deported people, they’re not coming back. And so that could very well lead to more sustainable inflation.
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