Inflation's New Tailwind

Remember back in May when I explained how I expected a wave of economically illiterate takes after April’s inflation report? I even set a bit of a trap to highlight them when they appeared, and sure enough, everything unfolded exactly as I thought.

In case you don’t recall, here’s the clip and the link for reference:

That was a lot of fun. Even better, right after that, I explained why I expected tariff-related inflation to start appearing in June or July. And once again, it played out just as anticipated.

Here’s the clip and the link if you’d like to see for yourself:

Well, not only has tariff-related inflation started showing up a little earlier than I expected with May’s report, June’s inflation rate is already more aggressive than I anticipated at this stage.

Both CPI and Core CPI have now had two consecutive months of rising inflation rates. One more month, and we’re looking at the start of a new trend. Definitely not what you want to see at this stage in the cycle.

You may have noticed the political spin claiming that “CPI beat expectations” this week after the data was released. That’s only part true, and completely beside the point. It’s mostly wrong because only Year-over-Year Core CPI came in below forecasts; headline CPI did not. And it’s irrelevant because expectations are simply best guesses. What actually matters is that inflation is rising again, and doing so at a time when it should be continuing to steadily fall or at least leveling off.

Even worse, much of the price increases from May 2025 - June 2025 in June’s CPI Report are tied directly to tariff-affected goods. Such as:

• Audio equipment +2.9%

• Cookware +4%

• Coffee +2.2%

• Durable goods +0.5%

• Linens +5.9%

• Major appliances +2.4%

• Olives +4.4%

• Sports equipment +1.8%

• Tomatoes +2.0%

• Toys +1.4%

In all honesty, I did pause when the latest Producer Price Index (PPI) data came out showing a clean decline from the previous month.

But then I saw JD Vance post about it on X, and it made me question if I was overlooking something. After all, he has churned out some of the most misguided and easily dis-proven economic takes lately as he tries to prop up an economically inept administration, despite having no real experience in this field.

Sure enough, I learned something new as he was dead wrong again as tariffs are “explicitly excluded from the PPI.” Funny how that works.

Now that earnings season is underway, you’ll also want be closely watching to see how often the word “inflation” comes up on corporate earnings calls. If mentions start climbing again, that’s another major warning sign of a resurgence of excessively high rates of inflation.

More importantly, it’s crucial to understand that the tariffs we’re dealing with now are just the baseline and the lowest rung of what Trump has proposed. Despite all the shifting rhetoric, the only measures actually implemented so far are the 10% across-the-board baseline tariff and the additional tariffs targeting China. None of the planned additional tariffs on other countries and the EU, ranging from ~10% to 50%, have been enacted yet.

If inflation is already reappearing with just a 10% baseline plus China-specific tariffs, imagine what will happen when more sweeping tariffs hit nearly every other US trading partner.

At this point, it’s hard to avoid calling it what it is: “Trumpflation.” We wouldn’t be in this situation without the tariff policies and the administration’s confusing, erratic, and often contradictory messaging.

While he’s busy calling his most faithful followers weak-minded idiots for believing that there is an Epstein List, he himself is the one who has swallowed some of the worst and ignorant economic conspiracies of our time hook, line, and sinker.

So, looking ahead, here are three things I’d expect if inflation were to keep building:

• Higher bond yields

• Surging commodity prices

• Surging stock prices

And sure enough, all three are happening right now.

People can argue all day about whether tariffs are a tax, a fee, or just an added cost of doing business. In the end, it doesn’t matter what you call them. It all leads to the same reality: US consumers will pay more for the same products because of tariffs.

To loosely paraphrase Shakespeare; “A turd by any other name still stinks.”

You can learn more about the history of tariffs and how they are either inflationary in a strong or decent economy (even in Economic Slowdowns), or make economic conditions far worse when implemented in recessions or depressions by killing demand in Tariffs: A history of US tariffs and their outcomes.

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