Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: So here's the likes this this morning. Tariff's casting down
Speaker 2: on further FED easing. Bloomberg Economics predicting the levies could
Speaker 2: add about zero point seven percent to core inflation. Joining
Speaker 2: us now to discuss as the former sen Lewis FED
Speaker 2: President Jim Bullard, Jim, Welcome to the program, sir. So
Speaker 2: the FED chair wants to wait to see the policies
Speaker 2: to be articulated, and I think it's fair to say
Speaker 2: they have been over the weekend. So Jim, from your
Speaker 2: perspective in your time at the FED, once they've been articulated,
Speaker 2: did you just assume that they stay?
Speaker 1: Yeah. I mean this is one salvo in the trade war,
Speaker 1: and I think there's much more to calm in various directions.
Speaker 3: This is mostly based on.
Speaker 1: The fanmol issue and the immigration issues.
Speaker 3: So it does seem like the three countries that are effected.
Speaker 1: Could take actions on those dimensions and this phase would
Speaker 1: get ended. But obviously, the the president campaign on a
Speaker 1: trade war, and I think you know, there's far more
Speaker 1: uncertainty in the future.
Speaker 4: How much of a template Jim is twenty seventeen, twenty
Speaker 4: eighteen in terms of the inflationary impact of Trump's tariffs
Speaker 4: to now when there are more goods being tariffed, but
Speaker 4: also there is a greater degree of inflation already basins
Speaker 4: the system.
Speaker 5: Yeah, I think the last one from twenty eighteen to
Speaker 5: twenty nineteen was the GDP effect, and blanket tariffs across
Speaker 5: the board of twenty five percent, which were met by
Speaker 5: other countries, would have.
Speaker 1: A big impact on GDP, and I think that would
Speaker 1: dominate everybody's thinking about the inflationary impacts. If they're there
Speaker 1: at all, would be a one time effect, it would
Speaker 1: be relatively minor.
Speaker 3: And that's what happened in twenty nineteen.
Speaker 1: The economy slowed down precipitously and the FED actually reduced rates,
Speaker 1: and I advocated.
Speaker 3: For that at that time as the right response.
Speaker 4: Back in twenty eighteen twenty nineteen, I knew what the
Speaker 4: begl would cost me. I knew how much gas was
Speaker 4: going to be. I had a sense of what prices were.
Speaker 4: Now people don't have as much of a sense of
Speaker 4: where prices are to that same sort of granular degree.
Speaker 4: Do you think there is that risk that companies have
Speaker 4: the ability to pass along price increases in a much
Speaker 4: more direct and consistent way because of how conditioned people
Speaker 4: are post pandemic.
Speaker 1: Yeah, I mean tariffs at this level are you have
Speaker 1: to think about them a little bit differently. I mean,
Speaker 1: you go into the bar and there's a bunch of
Speaker 1: beer for sale, and the Canadian beer costs three times
Speaker 1: as much as all the others.
Speaker 3: I suppose you're.
Speaker 1: Going to buy one of the other ones and maybe
Speaker 1: not buy the Canadian beer.
Speaker 3: So I think.
Speaker 1: Prohibitive type tariffs just shut down train altogether. I think
Speaker 1: for the cars as well, maybe it's not a good
Speaker 1: time to buy a car if it's going to cost three.
Speaker 3: Thousand dollars more, six thousand dollars more. The kinds of numbers.
Speaker 1: People are taught using around here, they can delay those
Speaker 1: types of purchases. So there's all the substitution that occurs
Speaker 1: with terrorists at this level.
Speaker 4: Trump is also talking about putting tariffs on the European Union.
Speaker 2: So can you view this as a one off.
Speaker 4: Increase in price level or because he's talking about more
Speaker 4: tariffs warning other countries that tariffs are coming down the pipeline,
Speaker 4: do you see this as an ongoing inflation threat?
Speaker 3: Yeah, I mean one way.
Speaker 1: So, first of all, this order is about the national
Speaker 1: emergency on fed meal and immigration. But if you just
Speaker 1: want to argue the economics, let's say, with the EU,
Speaker 1: then I think what's the response to the EU going
Speaker 1: to be? A simple response would be for them to
Speaker 1: lower their tariff level to the average tariff level of
Speaker 1: the US. That would make a lot of sense. These
Speaker 1: are both big economies. I don't see why the average
Speaker 1: tariff level has to be all that different between the two.
Speaker 3: Places, and that's something that the President has.
Speaker 1: Argued for, and it seems like maybe now is the
Speaker 1: time to think about that. Why not have the same
Speaker 1: ariage STAREF level in the two places.
Speaker 2: Jim, is there any reason why the Federal Reserve wouldn't
Speaker 2: just look through any short term inflation shock, any reason
Speaker 2: to believe they'd be nervous about second order effects in
Speaker 2: this building?
Speaker 1: Yeah? I think you know, as we've talked about many times,
Speaker 1: inflation expectations are a critical thing.
Speaker 3: That happened going up a little.
Speaker 1: Bit to your tips, up a little bit, So I
Speaker 1: do think that's a little bit concerning. But as I say,
Speaker 1: I mean, the last one from before was that the
Speaker 1: growth effects are large or can be large, and that
Speaker 1: would tend to dominate any one time increase in the
Speaker 1: place level.
Speaker 2: Hey Jim, I appreciate your time as always. Jim pulled
Speaker 2: out that the former Saint Lewis fed president