Economic advisor Kevin Hassett argues Trump’s tariffs aren’t causing inflation

Patriotism is now being used as an inflation control strategy by the White House, according to economic advisor Kevin Hassett, who on Monday told CNBC’s Squawk Box that Americans are choosing to buy more local products because of President Trump.

When asked why inflation hasn’t surged under aggressive tariff policies, Hassett replied, “There’s, I think, a lot of patriotism in the data.” He said this shift in consumer behavior is helping offset price hikes that many economists have long predicted.

According to CNBC, Kevin argued that prices on imported goods actually fell between December and May, a period when the U.S. rolled out several tariff measures under Trump’s direction.

Instead of climbing, import prices dropped, which the National Economic Council director believes is a direct result of Americans preferring domestic goods. “The bottom line is, people prefer American products,” Kevin said during the interview, suggesting Trump’s approach had pushed a “buy American” mindset nationwide.

Kevin says consumers avoid imports as foreign countries absorb tariffs

In his remarks, Kevin doubled down on the argument that Trump’s policies have altered behavior to the point where imports are no longer as attractive. He said, “Demand for imports has gone way down, so much that even with what tariffs have been there… we’ve seen prices going down.”

That’s despite fears that the new tariffs would drive up everyday costs. His theory is simple: people aren’t buying imports, so there’s less inflation pressure, even with duties in place.

He also claimed that countries the U.S. has trade deficits with are “eating the cost” of tariffs. That means places like Mexico, China, and Canada are not passing those extra costs onto American buyers, as some analysts had warned. Instead, they’re absorbing the economic hit.

Still, even the White House admits prices could rise later this year as tariffs continue to stack up. So far, Kevin insists that patriotic consumer behavior is keeping those effects at bay.

But not everyone agrees. Ernest Tedeschi, an economist at Yale’s Budget Lab and a former chief economist at the White House Council of Economic Advisers under Joe Biden, criticized the White House’s math. Ernest wrote that the method used in the White House report “will understate tariff effects in their import indices.”

He also cited recent data from Harvard University’s Pricing Lab, showing that import prices have actually gone up since March, right when new tariffs on Mexico, Canada, and China began.

Another reason prices haven’t surged yet, according to some critics, is that importers stocked up in advance. By buying products early, before tariffs kicked in, they avoided immediate price increases.

That stockpiling bought time, but doesn’t cancel out the longer-term risk. And while Trump once unveiled major tariffs during what he called “liberation day” in April, many of those plans were temporarily shelved, further delaying the expected inflation impact.

Markets hold steady as Trump targets EU and Mexico with 30% tariffs

Despite all the noise, markets didn’t collapse. On Monday, Trump announced the U.S. will impose 30% tariffs on both the European Union and Mexico, starting August 1.

Leaders in both regions said they’d continue negotiations this month, hoping to bring the rate down before the deadline. Even with that threat looming, investors were calm.

The Dow Jones Industrial Average went up 28 points (0.1%), the S&P 500 rose 0.1%, and the Nasdaq Composite gained 0.4%. Traders seem to believe some of these tariffs may be negotiated away before they take full effect.

But the tension isn’t just international. Trump is also pressuring the Federal Reserve again. Over the weekend, Kevin told ABC News that Trump can fire Federal Reserve Chair Jerome Powell “if there’s cause.”

That came as Trump officials started reviewing renovation costs at the Fed’s Washington, D.C. building, raising eyebrows about whether the administration is digging for leverage against Powell.

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