Interesting talking points from Fundstrat’s Tom Lee
| Thinker | Are Tariffs Inherently Inflationary? | Rationale |
|---|---|---|
| Hayek | Yes (systemically) | Tariffs distort price signals and cause misallocation—even without broad CPI inflation |
| Keynes | Maybe (contextual) | Depends on demand, employment levels, and slack capacity |
| Friedman | No (not without money growth) | Only money supply growth causes sustained inflation |
| Tom Lee | No (corporate behavior matters) | Tariffs raise costs, but only cause inflation if firms pass through and Fed accommodates |
Predictive Implication
- If the Fed maintains tight monetary policy while tariffs rise → Friedman is validated: transitory price shifts, no lasting inflation.
- If firms pass through prices and labor demands higher wages → Keynes and Hayek both see trouble: sticky inflation or misallocated resources.
- If central banks accommodate to preserve growth → All three criticize: monetary expansion turns tariffs into systemic inflation.