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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: So here's the likes this this morning. Tariff's casting down

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Speaker 2: on further FED easing. Bloomberg Economics predicting the levies could

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Speaker 2: add about zero point seven percent to core inflation. Joining

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Speaker 2: us now to discuss as the former sen Lewis FED

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Speaker 2: President Jim Bullard, Jim, Welcome to the program, sir. So

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Speaker 2: the FED chair wants to wait to see the policies

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Speaker 2: to be articulated, and I think it's fair to say

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Speaker 2: they have been over the weekend. So Jim, from your

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Speaker 2: perspective in your time at the FED, once they've been articulated,

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Speaker 2: did you just assume that they stay?

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Speaker 1: Yeah. I mean this is one salvo in the trade war,

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Speaker 1: and I think there's much more to calm in various directions.

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Speaker 3: This is mostly based on.

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Speaker 1: The fanmol issue and the immigration issues.

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Speaker 3: So it does seem like the three countries that are effected.

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Speaker 1: Could take actions on those dimensions and this phase would

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Speaker 1: get ended. But obviously, the the president campaign on a

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Speaker 1: trade war, and I think you know, there's far more

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Speaker 1: uncertainty in the future.

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Speaker 4: How much of a template Jim is twenty seventeen, twenty

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Speaker 4: eighteen in terms of the inflationary impact of Trump's tariffs

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Speaker 4: to now when there are more goods being tariffed, but

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Speaker 4: also there is a greater degree of inflation already basins

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Speaker 4: the system.

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Speaker 5: Yeah, I think the last one from twenty eighteen to

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Speaker 5: twenty nineteen was the GDP effect, and blanket tariffs across

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Speaker 5: the board of twenty five percent, which were met by

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Speaker 5: other countries, would have.

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Speaker 1: A big impact on GDP, and I think that would

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Speaker 1: dominate everybody's thinking about the inflationary impacts. If they're there

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Speaker 1: at all, would be a one time effect, it would

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Speaker 1: be relatively minor.

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Speaker 3: And that's what happened in twenty nineteen.

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Speaker 1: The economy slowed down precipitously and the FED actually reduced rates,

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Speaker 1: and I advocated.

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Speaker 3: For that at that time as the right response.

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Speaker 4: Back in twenty eighteen twenty nineteen, I knew what the

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Speaker 4: begl would cost me. I knew how much gas was

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Speaker 4: going to be. I had a sense of what prices were.

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Speaker 4: Now people don't have as much of a sense of

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Speaker 4: where prices are to that same sort of granular degree.

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Speaker 4: Do you think there is that risk that companies have

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Speaker 4: the ability to pass along price increases in a much

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Speaker 4: more direct and consistent way because of how conditioned people

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Speaker 4: are post pandemic.

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Speaker 1: Yeah, I mean tariffs at this level are you have

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Speaker 1: to think about them a little bit differently. I mean,

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Speaker 1: you go into the bar and there's a bunch of

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Speaker 1: beer for sale, and the Canadian beer costs three times

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Speaker 1: as much as all the others.

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Speaker 3: I suppose you're.

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Speaker 1: Going to buy one of the other ones and maybe

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Speaker 1: not buy the Canadian beer.

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Speaker 3: So I think.

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Speaker 1: Prohibitive type tariffs just shut down train altogether. I think

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Speaker 1: for the cars as well, maybe it's not a good

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Speaker 1: time to buy a car if it's going to cost three.

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Speaker 3: Thousand dollars more, six thousand dollars more. The kinds of numbers.

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Speaker 1: People are taught using around here, they can delay those

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Speaker 1: types of purchases. So there's all the substitution that occurs

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Speaker 1: with terrorists at this level.

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Speaker 4: Trump is also talking about putting tariffs on the European Union.

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Speaker 2: So can you view this as a one off.

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Speaker 4: Increase in price level or because he's talking about more

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Speaker 4: tariffs warning other countries that tariffs are coming down the pipeline,

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Speaker 4: do you see this as an ongoing inflation threat?

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Speaker 3: Yeah, I mean one way.

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Speaker 1: So, first of all, this order is about the national

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Speaker 1: emergency on fed meal and immigration. But if you just

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Speaker 1: want to argue the economics, let's say, with the EU,

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Speaker 1: then I think what's the response to the EU going

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Speaker 1: to be? A simple response would be for them to

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Speaker 1: lower their tariff level to the average tariff level of

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Speaker 1: the US. That would make a lot of sense. These

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Speaker 1: are both big economies. I don't see why the average

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Speaker 1: tariff level has to be all that different between the two.

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Speaker 3: Places, and that's something that the President has.

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Speaker 1: Argued for, and it seems like maybe now is the

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Speaker 1: time to think about that. Why not have the same

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Speaker 1: ariage STAREF level in the two places.

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Speaker 2: Jim, is there any reason why the Federal Reserve wouldn't

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Speaker 2: just look through any short term inflation shock, any reason

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Speaker 2: to believe they'd be nervous about second order effects in

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Speaker 2: this building?

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Speaker 1: Yeah? I think you know, as we've talked about many times,

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Speaker 1: inflation expectations are a critical thing.

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Speaker 3: That happened going up a little.

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Speaker 1: Bit to your tips, up a little bit, So I

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Speaker 1: do think that's a little bit concerning. But as I say,

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Speaker 1: I mean, the last one from before was that the

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Speaker 1: growth effects are large or can be large, and that

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Speaker 1: would tend to dominate any one time increase in the

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Speaker 1: place level.

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Speaker 2: Hey Jim, I appreciate your time as always. Jim pulled

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Speaker 2: out that the former Saint Lewis fed president