Tariff-Inflation Skeptics Win? Trump and “Allies” Celebrate July CPI, Mock Goldman CEO

TradingKey - After the U.S. Bureau of Labor Statistics released the July CPI report showing overall inflation below expectations, U.S. President Donald Trump declared that it is now proven fact that "tariffs do not cause inflation." Treasury Secretary Scott Bessent, newly nominated Fed governor Stephen Miran, and potential candidates for the next Fed chair all supported this view, increasing the likelihood of a larger rate cut in September.

The July CPI data, released on Tuesday, August 12, showed:

• U.S. July CPI month-over-month growth slowed to 0.2% from June’s 0.3%, in line with expectations
• Year-over-year CPI held steady at 2.7%, failing to rebound to the anticipated 2.8%

Trump posted on Tuesday that the facts prove tariffs have not caused inflation or any other problems in the U.S., except for bringing large amounts of cash into the U.S. Treasury.

On Sunday, Goldman Sachs economists reported that the structure of tariff cost-sharing in the U.S. is gradually shifting: the share of tariff costs borne by consumers is expected to rise from 22% in June to 67% by October, while the share borne by companies is expected to fall from 64% to below 10%. This implies that consumer prices may trend upward in the coming months.

After the July CPI data was released, Trump countered, stating that in most cases, consumers are not even paying these tariffs — it is primarily companies and governments, especially foreign companies and governments, that are paying.

Trump added that Goldman Sachs and its CEO David Solomon have made incorrect predictions about market reactions and tariffs in the past, and suggested that David either find a new economist or focus on being a DJ instead of running a large financial institution.

Besides Trump himself, Trump’s “close allies” also responded positively to the July CPI report, strongly supporting the view that tariffs have not led to a rebound in inflation.

Stephen Miran, current Chair of the White House Council of Economic Advisers and Trump’s recently nominated Fed governor, did not make a clear statement on the interest rate outlook, but praised Trump’s policies, stating that inflation has remained stable overall since the president took office.

Miran said that to this day, there is still no evidence that tariffs will trigger inflation, and many who expected an economic crisis have now realized it has not happened — and still has not happened.

James Bullard, former St. Louis Fed President recently rumored to be on the shortlist for the next Fed chair, said that six months before tariffs were implemented, FOMC members paused their rate cut plans. Now, there are six months of evidence showing that tariffs have not caused inflation — the impact was only a one-time price increase.

On the same day, U.S. Treasury Secretary Scott Bessent said in an interview that if the Fed had access to the real employment report data, they might have already resumed rate cuts in June or July.

Bessent said the July CPI report was excellent, and the real question now is whether a 50-basis-point rate cut should be considered in September.

However, he also mentioned that people originally expected goods inflation, but what actually emerged was a very strange services inflation.

JPMorgan economists warned that rising services inflation could make the inflation issue more intractable.

Stephen Brown, economist at Capital Economics, pointed out that the July CPI report brought another narrative shift — the impact of tariffs again being almost imperceptible, but the strong rise in service prices may mean that last month’s PCE inflation once again exceeded the target level.

Brown said that although this report may not be enough to stop the Fed from cutting rates earlier than he expected, it does reinforce the institution’s view that the market has overestimated the degree of easing over the next 18 months.