Where’s the tariff-driven inflation? Still missing, still messing with the models

For months, the economic consensus screamed bloody murder: tariffs would unleash a second wave of inflation, torch what was left of disinflation credibility, and send CPI back into orbit. We were told Trump’s tariff wall wasn’t just symbolic—it was economically radioactive. Price tags would pop. Wallets would wilt. Markets would groan.

And yet… crickets.

The numbers keep coming in, and they’re making a mockery of the models. CPI? Muted. PPI? Cooling. Sticky-price measures? Rolling over like they hit a wall. Real-time inflation is drifting below 2%, and instead of an inflationary flare-up, we're watching the smoke curl up and vanish into the wind. No tariff tantrum. No consumer pain spike. Just a bunch of red-faced forecasters quietly editing their slides.

And here’s the kicker: these tariffs aren’t minor tweaks. This is a generational reset—a post-WWII low-tariff regime blown up in broad daylight. These are meaningful, high-impact trade taxes. By textbook logic, someone—anyone—should be feeling the sting. But price data says otherwise.

So where’s the squeeze? Someone’s holding the hot potato, but it’s not the American consumer. Not yet. Maybe it’s the importers eating margins. Maybe it’s foreign producers cutting prices to stay in the game. Maybe global supply chains are just more elastic than we thought. But this is precisely where real economics parts ways with the ivory tower math.

Because theory tells us X causes Y—assuming Z stays constant. But Z never stays constant. In fact, Z is usually the part the models fudge. Human behavior, market adaptability, the speed at which capital repositions—none of that shows up in the macro econometric blender. And so the output is always a little off, and sometimes wildly so.

This isn’t an argument for tariffs. It’s an argument against lazy prediction dressed up as science. Because if there’s one thing the past five years should’ve taught us, it’s that inflation is always and everywhere a monetary phenomenon, not a line item on an import ledger. Tariffs can distort prices, sure. They can cause friction. But without fuel from money supply or fiscal excess, they don’t generate a broad price spiral.

And let’s not let the financial press off the hook here. Bloomberg, the FT, and the usual suspects ran hot on this narrative—printing doom-laced headlines that made it sound like every Walmart shopper would be crushed under the weight of $25 Chinese towels and $80 phone chargers. It didn’t happen. The tariffs landed, the sky didn’t fall, and most of the media quietly moved on. No accountability, no walk-back, just the next scare.

Yes, maybe inflation still shows up later. Maybe it's slow burn, not flash fire. But right now? It’s a swing and a miss. And if you’re keeping score, the same economists who missed the 2021 inflation surge, then fumbled the “transitory” call, are now striking out again. That’s not a forecasting record—that’s a liability.

The lesson here isn’t about tariffs. It’s about hubris. Economics is best when it sticks to qualitative logic and gets humbled the moment it tries to go quantitative. Markets adapt. People adjust. And sometimes, the system eats a shock and keeps walking.

So no, the tariff inflation ghost hasn't shown up. And until it does, maybe the forecasters could shut the models down, step off the stage, and stop calling every shadow a monster.