The Risk of a Persistent Inflation Lift from Trade Protectionism
Assessments of macroeconomic effects of trade wars appear to be primarily viewed through the lens of a growth headwind rather than an inflation tailwind. We think protectionist trade policies might represent a persistent upward influence on inflation rather than just a one-off step-up in the price level. We would argue that with growth running ahead of the Fed’s assessment of its sustainable longer-run trend, the unemployment rate already below the rate the Fed judges as being consistent with full employment, and with inflation on target, policymakers should be more concerned about the inflationary consequences of tariffs rather than the growth effects.
RDQ Economics provides global macroeconomic consulting services with an emphasis on U.S. economic fundamentals and monetary policy.
Our views are driven by consistent application of classical economic and monetary principles and has generated superior anticipation of changes in the stance of monetary policy and of movements in economic growth and inflation.
The founders of RDQ Economics, John Ryding and Conrad DeQuadros, have a combined experience of 26 years on Wall Street, 12 years of experience in central banking at the Federal Reserve and the Bank of England and nine years in the independent research space. John and Conrad have worked closely with fixed income, foreign exchange, and equity traders and portfolio managers, which has enabled their analysis and advice to be tailored to a clientele that is focused on trading and investment decisions.
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