April 10, 2025, Fairfax, Va.—Americans for Limited Government Executive Director Robert Romano today released the following statement in response to the latest inflation numbers from the Bureau of Labor Statistics showing prices fell 0.1 percent in March:
“Inflation is falling in spite of repeated, embarrassing predictions by opponents of President Donald Trump’s tariffs of both parties that prices would rise in response to his tariffs on Canada, Mexico, China and the rest of the world. It simply has not happened, with inflation the past 12 months now at 2.4 percent.
“Of course, they need only have read Milton Friedman who taught us that ‘inflation is always and everywhere a monetary phenomenon’ with the critical factors being the money supply, which has not increased since 2022, and production which has been rising after the Covid-led production lockdowns. Tax rates and tariffs do not determine inflation per se. The global supply crisis has been easing, but so too has demand as American households maxed out their credit. Total credit owned and securitized has actually declined by 1 percent the past 12 months, according to data compiled by the Federal Reserve. Additionally, unemployment had already risen by more than 1 million before President Trump was even sworn into office, which is what always happens as inflation slows down along with demand, usually leading to a slowdown or a recession historically.
“It could be we already had the recession but it just hasn’t been booked yet, with unemployment not moving too much because of the ongoing labor shortages thanks to the Baby Boomer retirement wave with more than 900,000 Americans over the age of 65 leaving the labor force every year and accelerating or that there is still something on the horizon. Either way, this has all been years in the making. Inflation has been slowing, it just didn’t slow down fast enough to help Joe Biden and Kamala Harris in 2024, who had to run on a record of inflation outpacing incomes.
“As it is, the effective federal funds rate set by the Federal Reserve, currently at 4.3 percent, has been above the consumer inflation rate now at 2.4 percent for about two years now, which also should have told everyone what they need to know about the direction inflation continues to move in. Aren’t higher interest rates generally used to push inflation down? Isn’t that the whole point?
“Finally, very little analysis has been done about how trade partners have continually been devaluing their currencies to gain trade advantage to cheapen exports to the United States, which has the impact of strengthening the dollar. For example, the Mexican peso has devalued more than 18 percent against the dollar the past year, making imports from Mexico relatively cheaper. The dollar has nominally strengthened 3.9 percent in the past 12 months. And so, the strong dollar usually accompanies commodities prices in producer prices taking a hit, which they have.
“But this is not the first time tariff-centric views have dominated economic and political discourse to the absence of all other factors, with most pundits still ignoring competitive devaluations during the Great Depression as trade partners came off the interwar gold standard as a very good example. When we consider inflation or deflation, we should always be considering the supply of money, the level of production and the relative value of the currencies of trade partners.
“And everyone now must be surprised prices are falling because tariffs and Donald Trump are the center of the universe in their eyes. Now if prices continue falling and unemployment ticks up more that will be because of tariffs when they were making the opposite argument for three months. This is not how we do analysis or set policies. If we have erroneous discussions about inflation, as Congress continues to have, we could wind up with erroneous, knee-jerk policies we have seen this month, that could wind up tying President Trump’s hands to carry on economic relations with nations abroad and as he campaigned on to get better deals for the American people, Main Street and working families. Let’s let President Trump do the job he was elected to do.”
To view online: https://getliberty.org/2025/04/inflation-is-falling-not-rising-embarrassing-anti-tariff-politicians/
For media availability contact Americans for Limited Government at media@limitgov.org.
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