As we predicted here at BATG, consumers feeling the pressure of higher prices related to tariffs are expressing significant disillusionment with Mr. Trump’s economic policies. And as we talked about last week, the election results resonated with concerns over affordability. Even many conservative commentators are warning Mr. Trump to stop trying to tell people that costs are down and telling them he has eliminated Biden’s inflation. People know what they are able to afford, and right now groceries are still rising. As we’ve noted, tariffs are not responsible for all of this, but it seems like about .5% of our current inflation is due to the tariffs, and I suspect more is coming if Mr. Trump doesn’t relent. As seen in the figure below*, there is a noted uptick in CPI inflation coincident with his tariff policy enactment on “liberation day.”

This past week Mr. Trump has once again been forced to retreat from the policies which he promoted, eliminating tariffs on bananas, coffee and beef:

WASHINGTON — President Trump announced Friday that he was scrapping U.S. tariffs on beef, coffee, tropical fruits and a broad swath of other commodities — a dramatic move that comes amid mounting pressure on his administration to better combat high consumer prices. Trump has built his second term around imposing steep levies on goods imported into the U.S. in hopes of encouraging domestic production and lifting the U.S. economy. His abrupt retreat from his signature tariff policy on so many staples key to the American diet is significant, and it comes after voters in off-year elections this month cited economic concerns as their top issue, resulting in big wins for Democrats in Virginia, New Jersey and other key races around the country. “We just did a little bit of a rollback on some foods like coffee,” Trump said aboard Air Force One as he flew to Florida hours after the tariff announcement was made. Pressed on his tariffs helping to increase consumer prices, Trump acknowledged, “I say they may, in some cases” have that effect.

While this retraction is a tacit admission that his policies have hurt consumers, let’s applaud the president for bending to reality. For him to retract the tariffs in response to high prices is an admission that reducing tariffs will reduce consumer prices. Why we ever would have had tariffs on coffee or bananas is beyond me. It is my hope that when the Supreme Court rules his tariff policies unconstitutional that he will use it as an excuse to dial back the trade war he started. Otherwise I feel the Republicans will have a bleak mid-term. Adam Smith will have his day, either the easy way or the hard way.

* HT to Mark Perry