Everyone predicted massive tariffs would send inflation soaring. It didn't happen. I foresaw this (see my earlier piece) for some simple reasons.
Tariffs hit both prices and trade volumes, but nobody can predict which matters more. When trade keeps flowing, buyers and sellers split the tariff burden unpredictably. If sellers eat the cost, their profits shrink but prices stay flat. If buyers pay up, it depends how the pain gets shared between importers, wholesalers, retailers and shoppers. Only when consumers pay more do we get inflation.
