Trump’s Tariffs Push Inflation Higher: ‘Trumpists Are Happy To Promote A Straw Man,’ Says Paul Krugman

Economist Paul Krugman argues that the recent impact of trade policy on consumer prices is a solved equation, with actual data showing that tariffs have increased U.S. inflation by exactly 0.8 percentage points.
The 0.8% Reality
Addressing what some have called an economic mystery, Krugman asserts that there “isn’t really a puzzle here” regarding why inflation didn’t spike further following recent trade hikes.
By analyzing total customs duties as a percentage of GDP, Krugman identifies in his Substack post that tax receipts rose from 0.3% of GDP pre-Trump to 1.1%. This 0.8 percentage point increase serves as a direct “first-pass estimate” of the inflationary impact.
The data is reinforced by the HBS Pricing Lab, which estimates that the Consumer Price Index (CPI) is currently 0.8 percentage points higher than it would have been without the tariffs.
This aligns perfectly with 2025 core PCE inflation nowcasts, which sit at 3%—exactly 0.8 points above the 2.2% forecast made before the tariff spree. …Full story available on Benzinga.com

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