While the increase in the US CPI for November seems to be relatively moderate, media attention on this issue has intensified, with some even linking inflation to the rise of tariffs, reflecting growing concerns from the global market regarding the US’ trade protectionist policies.
Latest data from US Bureau of Labor Statistics showed on Wednesday that the consumer price index climbed 2.7 percent for the 12 months ended in November.
The Wall Street Journal reported on Wednesday that strengthening inflation poses challenge for the incoming Trump administration and Fed.
It is no secret that the fluctuations in CPI have long served as a crucial reference indicator for the Federal Reserve’s decision-making processes, as changes in CPI not only reflect shifts in consumers’ purchasing power but also play a pivotal role in shaping US monetary policy.
In recent years, however, Washington’s implementation of trade protectionist policies has introduced a new layer of complexity to CPI fluctuations. There is growing concern over how Washington’s trade strategies exacerbate inflationary pressure. Just on Wednesday, the Office of the United States Trade Representative announced tariff increases under Section 301 for imports from China of certain tungsten products, wafers and polysilicon. The rates for solar wafers and polysilicon will increase to 50 percent, and the rates for certain tungsten products will increase to 25 percent.
Historically, the imposition of tariffs has created additional cost pressures on businesses, compelling them to pass these increased expenses onto consumers. As a result, significant price surges have been observed across a wide array of essential goods, including food, clothing, automobiles and other consumer products. This rise in prices not only intensifies the economic burden on households but also heightens market concerns over inflationary trends. Therefore, the interplay between trade policies and CPI fluctuations has become a critical area of concern for market players.
It is important to note that the rise in the US inflation has already transcended mere economic implications, evolving into a multifaceted political and social challenge. Inflation directly affects the interests of consumers. When prices escalate too rapidly, it may trigger public dissatisfaction, which, to a certain extent, has the potential to limit Washington’s room to implement tariff policies.
In recent years particularly, the protectionist measures adopted by the US have failed to revitalize the American economy, as expected; instead, they have contributed to heightened inflationary pressures and increased uncertainty in the market. Furthermore, the tariff increase policies have not only elevated production costs for domestic companies, they have also intensified tensions in international trade, resulting in disruptions to global supply chains. Such short-sighted policies not only undermine the economic interests of the US but also cast a shadow over the stability and growth of the global economy.
The various trade protectionist policies and measures implemented by the US are actually economic bullying aimed at asserting its dominance in the global marketplace. These policies are frequently introduced in response to intensifying domestic economic contradictions, as politicians seek to divert public attention from internal challenges by engaging in external trade bullying for short-term economic and political gains.
However, trade protectionist policies have never been an effective means of solving economic problems. On the contrary, they only exacerbate global economic turmoil and uncertainty.
At a time when economies around the world have become intricately interconnected, the protectionist policies adopted by the US present a significant challenge and potential threat to this delicate global economic order, akin to injecting a destructive toxin into the global economic system.
Furthermore, such actions not only jeopardize international trade relationships but also create an environment ripe for escalating trade disputes, which could lead to a cycle of retaliation that exacerbates tensions and destabilizes markets worldwide. As nations grapple with the repercussions of these policies, the risk of a fragmented global economy looms larger.
