Treasury Secretary Scott Bessent continually denies that tariffs will become a tax on consumers. When asked if the Trump administration was comfortable with the rising cost of goods, Bessent declared, “the American dream is not ‘let them eat flat screens.’”
“Not at all,” Bessent replied. “What I’m saying is the American dream is not ‘let them eat flat screens.’ If American families aren’t able to afford a home, don’t believe that their children will do better than they are [doing], the American dream is not contingent on cheap baubles from China, it is more than that. And we are focused on affordability, but it’s mortgages, it’s cars, it’s real wage gains.”
If tariffs become more widespread the inflationary effects will cause the affordability of items to rise. No one can afford to repair their homes when lumber costs are soaring. Builders are forced to raise costs on new housing starts, for example, when materials rise in expense. The issue here is not the demand for cheap Chinese goods but the demand for essentials like energy, steel, etc.
Auto prices are at an all-time high. We steered away from pushed EVs on the public but are refusing to permit cheaper Chinese autos in our country. Autos are being targeted hard by tariffs and manufacturing costs have becoming astronomical. China is able to produce cheap autos because manufacturing costs are far less.
Treasuries impact mortgage rates and are largely driven by supply and demand for US government debt. When inflation rises due to tariffs, bondholders demand higher yields to offset the decreased purchasing power. This leads to declining bond prices and rising interest rates across the board, including for mortgages.
As for wages, businesses will face higher operating costs due to tariffs and have less revenue to pass on to employees. Worse, businesses seeking to avoid reciprocal tariffs may simply leave the US.
Politicians should not quote Marie Antoinette. The French people made her pay with her head when the economy turned down. Bessent and others advising Trump fail to understand the broader impact of stifling free trade. Furthermore, these statements are out of touch with the cost of living crisis as informed Americans know that tariffs will impact far more than the cost of a flat screen TV.
