The Dog That Didn't Bark: Why the Treasury Secretary Says Tariffs Aren't Fueling Inflation
On February 4, 2026, Treasury Secretary Scott Bessent sat in the "hot seat" before the House Financial Services Committee to deliver a bold message: the massive inflation spike critics predicted from the administration's tariff policy simply hasn't happened.
$ENSO In a sharp exchange with Rep. Maxine Waters, Bessent defended the administration’s trade strategy, claiming that the "inflation propagandists" were wrong. Here’s the breakdown of his argument:
1. "150 Years of Data"
Bessent cited a San Francisco Federal Reserve study spanning 150 years to argue that tariffs do not cause persistent inflation. His logic? While a tariff might cause a one-time price jump for a specific product (like a car or a washing machine), it doesn't create the "wage-price spiral" necessary for sustained, year-over-year inflation.
$SYN 2. The "Dog That Didn't Bark"
Addressing his own past skepticism, Bessent admitted he once warned investors that tariffs could be inflationary. However, he now calls it the "dog that didn't bark," pointing out that broad-based inflation has trended downward in early 2026 despite the new duties. He attributes current price pressures to the service economy and high housing costs rather than trade policy.
3. The "One-Time Adjustment" Theory
Bessent maintains that any price increases are merely a one-time shift in price levels—similar to a VAT hike—rather than a continuous inflationary engine. He argues that by pairing tariffs with deregulation and the "One Big Beautiful Bill" tax cuts, the administration is actually creating a "non-inflationary boom."
$TWT While critics argue that costs for lumber and steel have surged, Bessent countered by noting that energy prices and rents are easing, providing a "cushion" for American families. He remains "very, very optimistic" that 2026 will be the year of the American manufacturing comeback.
#TariffImpact #Inflationdata #ADPWatch