US President Trump: Tariffs Do Not Cause Inflation but Create Wealth
US President Trump stated publicly that tariffs do not cause inflation but instead create wealth. This statement was made during a recent public speech, emphasizing that tariff revenues have brought significant cash flow into the US.
Trump has repeatedly reiterated similar views on Truth Social, claiming that tariffs have generated trillions of dollars in revenue, benefiting the stock market and the overall wealth of the nation, without causing inflation issues. He pointed out that consumers are not bearing the main costs, which are instead paid by businesses and foreign governments. His latest statement centers on "creating wealth," consistent with his previous assertion that tariffs have not triggered inflation.
A research report released by the New York Fed in October indicated that tariffs contributed 2.9 percentage points to consumer goods inflation from 2025 to 2026. The study estimated that without tariffs, prices of related goods would have slightly decreased. The report also noted that tariffs not only raise the prices of imported goods but also increase the prices of some domestic goods through the costs of intermediate goods, with full transmission taking about a year.
The current average tariff level in the US has risen significantly compared to before Trump took office. Some studies show that foreign exporters bear a certain proportion of costs, but most analyses suggest that US importers and retailers absorb the majority, gradually passing costs down the supply chain. Trump's statements contrast directly with observations from some economists at the Fed and the market regarding price transmission.
Tariff revenues flow into the US Treasury, constituting fiscal inflows. Importers and supply chain companies bear direct costs, while consumers face price adjustments. The stock market is supported by expectations of corporate profits and reinvestment, while import-dependent companies and downstream consumers face cost pressures. Event-driven policy statements have reinforced the official narrative of tariffs as a tool for wealth redistribution.
Source: Public Information
ABAB AI Insight
Trump articulated the framework of "tariffs do not cause inflation, revenues go to the Treasury, and consumers do not bear the main costs" through the Truth Social platform in August 2025, specifically criticizing institutions like Goldman Sachs for incorrect predictions. This statement extends the logic to "creating wealth," continuing his consistent positioning of tariffs as fiscal tools rather than price tools. Historically, Trump imposed tariffs on steel, aluminum, and Chinese goods during his first term and significantly expanded their scope in his second term.
Tariff revenues directly translate into cash flow for the US Treasury while altering corporate procurement and investment decisions by increasing import costs. Trump defines the flow of funds as an increase in national wealth, motivated by substituting some tax revenue with tariffs and promoting domestic production substitution. Actual resource mobilization manifests as importers adjusting supply chains, some production returning or shifting to alternative sources, and direct fiscal acquisition of tariff revenues.
Similar paths can be seen during the high tariff period in 19th century America and the US-China trade friction phase of 2018-2019. At that time, tariffs were also viewed by some policymakers as tools to protect domestic industries and increase fiscal revenue, but empirical evidence shows that the costs of price transmission and supply chain adjustments persist in the long term. The US is currently in a transmission period following a significant increase in tariffs, with policy shifting from expansionary implementation to effect justification.
Essentially, this represents a transfer of pricing power. Tariffs alter the relative prices of imported and domestic goods, shifting some pricing power from foreign exporters and global supply chains to US policymakers and protected domestic producers. The mechanism involves raising the costs of foreign supply through administrative means, forcing the market to reallocate the burden of price absorption while shifting tax authority from the consumption end or income tax to the trade segment.
ABAB News · Cognitive Law
- Tariffs are price filters, not inflation switches.
- Wealth = tariff revenue + price redistribution.
- Rising import costs simultaneously transfer domestic pricing power.