Rupert Murdoch’s Wall Street Journal just slapped Donald Trump with a stark warning of a looming “political problem” over who will wind up paying his tariffs.
In an editorial published Thursday, the paper’s editorial board said fresh inflation data showed costs climbing for U.S. producers, undermining the president’s claim that other countries would be paying for his import levies.
Consumer-price data released Tuesday from the Bureau of Labor Statistics showed that the Consumer Price Index rose just 0.2 percent in July and 2.7 percent from a year earlier, suggesting households had yet to feel broad tariff-related price hikes.
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But the Producer Price Index (PPI) released Thursday showed wholesale prices climbing faster than economists anticipated, indicating higher consumer prices were on their way.
PPI jumped 0.9 percent in July, marking the sharpest monthly rise in more than three years. It also climbed 3.3 percent year-over-year.
The Journal said many U.S. companies have so far shielded consumers by absorbing those costs.
“This hasn’t shown up in consumer prices so far because many companies entered the Trump tariff era with large cash reserves or wider margins, so they can absorb these costs for the time being,” the board said, adding: “But these companies can’t do this forever.”
It warned that money diverted to tariffs or tariff-driven price hikes “isn’t available for reinvestment in the business, or to return to shareholders.”
That reality, the board argued, “poses a political problem for Mr. Trump and Republicans.”
“The President promises voters that foreigners will pay for his tariff policies. These price data caution that the economy may have other ideas,” the board said.
Americans could end up paying “a big chunk of the tariff bill,” either directly through higher prices or indirectly via slower wage growth.
“With the consumer price index running at an annualized rate not seen in over four years and PPI for core goods—which would be most sensitive to tariffs—now down at a 0.7 percent annualized rate since January, the doom-and-gloom predictions of President Trump’s tariffs ratcheting up inflation continue to be proven flat-out wrong," White House Spokesman Kush Desai told the Daily Beast in a statement.
“The Trump administration’s policies swiftly put an end to Joe Biden’s inflation crisis, and as trillions in investments pour into the United States, they’re now laying the groundwork for a long-term economic resurgence for the American people,” he added.
Trump bragged in a post-election interview with NBC News in December that he “won on groceries,” pointing to soaring food costs during President Joe Biden’s term as pivotal to his victory. But the Journal’s warning suggests Americans could soon be eyeing rising grocery bills under Trump, too.
Real average hourly earnings rose just 0.1 percent in July after no change in June, and over the past 12 months real average hourly earnings increased only 1.2 percent, the board noted, citing BLS data.
The editorial board concluded that if voters see rising costs without matching wage gains, Republicans would be in “the political danger zone.”
“Republicans will make the same mistake as the Biden Administration if they keep telling voters everything is fabulous but the evidence at the grocery store or Applebee’s tells them something different,” it said.
