President Donald Trump told a campaign rally in Montana that tariffs do not cause inflation but create wealth. However, three New York Federal Reserve economists writing for Liberty Street Economics found that tariffs have raised consumer prices. Their analysis estimates that each percentage point increase in average tariffs lifts consumer goods prices by about a quarter of a percentage point after one year, and that tariffs added 2.9 percentage points to goods price inflation by February 2026, with goods prices otherwise falling slightly. About two thirds of the increase comes from pricier imports and one third from U.S.-made goods as input costs rise, a process taking roughly 6-12 months. The article also notes that the Supreme Court invalidated most IEEPA tariffs in February 2026, and in late July the administration imposed new 10% to 12.5% duties on more than 80 countries under Section 301.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on fool.com ↗
Keywords
tariffsinflationDonald TrumpFed
Open a keyword to see other news on the same topic.
Related tickers and likely impact
SPY
• NeutralSPDR S&P 500 ETF
Relevance: low
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/23/2026 | 759.85 |
| Change that session | -0.54% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- Trumpflation Is Evolving , and There a New Twist That Threatens to Sink Stocks
AI infrastructure spending has lifted US stock indexes to record highs, but the article argues that Trumpflation, inflation driven by President Trump's tariffs and the Iran war, is becoming entrenched. Annualized inflation rose to a multi-year high of 4.2% in May, prompting a rate hike on Sept. 16. A New York Fed study found tariffs had lifted goods price inflation by 2.9 percentage points by February 2026, while the disruption of about 20 million barrels of crude a day through the Strait of Hormuz sent diesel prices to records. Core inflation now suggests the Iran war is reshaping transport and supply chains, and FOMC policymakers in June flagged the costs of GPUs and HBM from the AI build-out as a new inflation source. That raises the risk of more aggressive rate hikes that could end the AI-driven rally.
- President Donald Trump Claims , We Dont Have Inflation , and Tariffs Dont Cause Inflation , but a New Report Strongly Disagrees
Despite Trump's claim that there is no inflation and tariffs don't cause it, a New York Fed report by three economists finds tariffs added 2.9 percentage points to goods price inflation through February 2026. Each percentage point increase in average tariffs translated into about a quarter-percentage-point rise in consumer prices after one year, with a 10% across-the-board tariff yielding a 2.6% increase in consumer goods prices. The article also points to broader inflation driven by the Iran war and the closure of the Strait of Hormuz, with fuel oil up 74.0% and overall CPI up 3.7% over the past year. It warns that persistent inflation could prompt the Federal Reserve to tighten further, raising borrowing costs and potentially sending the AI-driven stock market lower.
- President Donald Trump Claims, "We Don't Have Inflation, and Tariffs Don't Cause Inflation," but a New Report Strongly Disagrees
Although the stock market has posted strong returns under President Trump, the article argues his inflation-driving policies may be the biggest threat to the AI-driven bull market. A New York Federal Reserve report by three economists finds that by February 2026, tariffs had added 2.9 percentage points to goods price inflation, and each percentage point increase in average tariffs lifted consumer prices by about a quarter of a point after one year. Beyond tariffs, the Iran war and the ongoing closure of the Strait of Hormuz have pushed fuel prices sharply higher, with fuel oil up 74.0% and gasoline up 34.2% over the past year, while overall CPI rose 3.7%. The article warns that persistent inflation could prompt the Fed to raise rates more aggressively, slowing AI infrastructure investment and sending stocks lower.
- There a 35 % Chance That the Fed Hikes Rates at Least 4 Times by September 2027 , Which Can Decimate the AI - Driven Bull Market
As of Oct. 11, the CME FedWatch Tool put the combined probability at 34.7% that the FOMC would raise the federal funds rate (currently 3.75%-4.00%) by 100 to 175 basis points over the next 11 months, meaning at least four hikes by the September 2027 meeting. The article cites Trumpflation as the main driver: Trump's tariffs lifted consumer goods prices by 2.9 percentage points by February 2026, and the Iran war's disruption of the Strait of Hormuz has sent fuel prices soaring. Because AI infrastructure is partly debt-financed, higher borrowing costs could slow data center build-out and hurt growth, and the author warns this could derail the AI-driven bull market given how richly stocks are priced.
- News Flash: Trumpflation Is Expected to Ramp Up the Fed's Rate-Hiking Cycle in 2027
The article argues that inflation tied to President Donald Trump's policies, including tariffs and the effects of the Iran war, is raising the odds of a more aggressive Federal Reserve rate-hiking cycle. Ahead of the September inflation report released on Oct. 14, the CME FedWatch Tool put the chance of a hike at the Oct. 28 meeting at just 17% as of Oct. 9, yet 16 of 18 policymakers in the September dot plot still forecast another hike this year. After the Fed raised rates by 25 basis points to 3.75%-4%, FedWatch sees less than a 6% chance that rates stay unchanged or rise only 25 basis points over the next 11 months. The article cites a New York Fed finding that tariffs added 2.9 percentage points to goods price inflation by February 2026. It warns that if higher borrowing costs slow AI infrastructure spending, the Dow Jones, S&P 500 and Nasdaq could suffer.
- President Donald Trump Just Proclaimed, "Tariffs Don't Cause Inflation, They Cause Wealth," but Data From Federal Reserve Economists Show Otherwise
President Donald Trump told a Montana campaign rally ahead of the Nov. 3 midterms that tariffs don't cause inflation but “cause wealth.” Citing New York Fed economists' research, the article says each percentage point increase in average tariffs raised consumer goods prices by about a quarter of a percentage point after one year. The economists estimate Trump's tariffs added 2.9 percentage points to goods price inflation by February 2026, and that goods prices would have slightly fallen without them. The article also notes the U.S. Supreme Court invalidated most IEEPA tariffs in February 2026, while new Section 301 duties of 10% to 12.5% imposed in late July cover more than 80 countries and more than 99% of U.S. imports.
Related markets
Latest news
- Elon Musk Just Delivered Spectacular News for SpaceX Stock Investors
SpaceX (SPCX) shares have fallen 29% from a peak of $225 after their June listing, to $159.31 at the close on Oct. 21, with a trailing P/S of 67.5 versus 6.7 for the Nasdaq-100. Musk believes the super intelligence (SI) business could lift annualized revenue to between $500 billion and $1 trillion by the end of 2027, compared with $32 billion generated over the last four quarters. This relies partly on a 440,000-GPU Nvidia Vera Rubin cluster Musk wants online by mid-2027, and on the Grok Bot agent, which is still in beta. The article notes that if SpaceX reaches $500 billion in annualized revenue, its forward P/S could fall to 4.3 within about 15 months, while Wall Street's average forecast is $167 billion in revenue next year. Starlink had 13.6 million paying subscribers at the end of Q3, up 89% year over year.
- AI Debt Has Exploded 4X To Nearly $500 Billion: What It Means For NVDA, ORCL And CRWV, According To IO Fund
IO Fund argues AI infrastructure is becoming a financeable asset class, with AI-related debt issuance reaching $466 billion through September per Morgan Stanley data, versus $101 billion a year earlier. Oracle reported $125.3 billion in notes payable and borrowings in Q1, over three times its $37.1 billion in cash and marketable securities, while quarterly interest expense rose 55% to $1.43 billion. CoreWeave's total debt reached about $35.6 billion, and IO Fund wrote that more than 25% of its revenue goes to servicing that debt. Nvidia generated $127 billion in free cash flow over the 12 months ended July 2026 and has signed preliminary agreements with financial firms targeting more than $500 billion in third-party capital. The article also cites 14 circular financing arrangements identified by the IMF across the GPU ecosystem.
- Netflix Is Shaking Up Its Content Leadership. Here's What Needs to Happen Next.
Netflix has fired its content chief and several top executives while cutting 1,000 jobs, its largest reduction and shake-up since 2022. The author argues the core problem is declining engagement rather than finances: hours watched per subscriber are down 4% year over year, and viewing of the top 100 originals has fallen 20%. Despite pushing live events, podcasts and gaming, the author says these efforts have not worked well and that Netflix should focus on a few well-made movies and shows. The author notes Netflix shares have dropped nearly 50% over the past year, which could present an opportunity for long-term investors before the new content leadership puts its ideas to work in 2027.
- Good News for Tesla Investors: 3 Key Benchmarks Elon Musk's Company Delivered On in the Third Quarter
Tesla's third-quarter earnings report and call met three benchmarks investors had been watching: automotive gross margin, funding of capital spending, and Robotaxi rollout. Automotive gross margin (excluding regulatory credit sales) recovered to 18.3% from 16.3% in Q2, and global vehicle inventories fell to 11 days from 27 days at the end of Q1, while Musk said demand was exceeding production by a significant margin. CFO Vaibhav Taneja lowered full-year capex guidance to approximately $20 billion, after earlier forecasts had risen above $25 billion, easing concerns about self-funding despite $30 billion in credit lined up. On Robotaxi and Cybercab, AI head Ashok Elluswamy said the bottlenecks are largely technology-driven and that the FSD v15 release could come around Q1 or Q2. The author argues the rollout is in line with management's outlook and that investors have reason to feel more positive.
- Where Will Neurocrine Biosciences Be in 5 Years?
Neurocrine reported Q2 2026 revenue of $959 million, up 39% year over year. Flagship Ingrezza sales rose 15% to $716 million, and management raised its full-year 2026 Ingrezza forecast to between $2.825 billion and $2.875 billion. Crenessity sales reached $184 million, up 247%, while Vykat XR, acquired from Soleno Therapeutics for about $2.9 billion, generated about $94 million in Q2; together the two drugs already run at more than $1 billion annualized. Late-stage trials for depression and schizophrenia candidates are expected to produce results in 2027. The author expects revenue above $6 billion by 2031, but says the stock's path will depend on newer drugs and how much investors are willing to pay for earnings.
- Is Spotify Technology SA a Buy After Its Latest Earnings Report?
Spotify reported quarterly revenue of nearly 5 billion euros ($5.6 billion), up 16% year over year, with premium revenue rising 17% to nearly 4.5 billion euros. Monthly active users grew 11% to 788 million and premium subscribers rose 9% to 306 million. Attributable net income fell to 518 million euros ($580 million) from 899 million euros a year earlier, though the article notes the prior-year result was boosted by large finance income and a 72 million euro ($81 million) tax benefit. Operating income reached 672 million euros ($753 million), above guidance, gross margin hit a record 33%, and free cash flow was 735 million euros ($823 million). For the fourth quarter, management guided to revenue of about 5.2 billion euros ($5.8 billion) and operating income of 820 million euros ($919 million), while the author views the high valuation (forward P/E near 52) as justified by the company's strengthening position.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.