Tariffs and Immigration Policies Fuel US Inflation

Moody's Analytics chief economist Mark Zandi is warning Americans about the root cause of their high inflation and increasing cost of living. According to Zandi, the uncomfortably high inflation is a result of deliberate policy decisions, specifically broad-based tariffs and highly restrictive immigration laws.

Zandi estimated that tariffs imposed under the Trump administration added 0.5 percentage points to inflation last year and will add another 0.2 points this year. He also stated that tough immigration policies are steadily adding to inflation because they reduce the available workforce in essential sectors such as construction and agriculture, leading to labor shortages and higher production costs.

Zandi emphasized that underlying economic forces are actually leaning against inflation, with a soft job market, moderating labor costs, rising vacancy rates, falling rents on new leases, and weak vehicle prices pushing inflation downward. However, these natural disinflation trends are being overshadowed by policy choices that raise costs across the economy.