Protectionism is not inflationary

Source: EconLog
by Scott Sumner

“Protectionism is clearly a bad policy. But it’s not bad for the reasons that many people assume. If you put barriers on the import of a specific good, it tends to raise the relative price of that good. But an across the board import tax does not raise the overall cost of living. Recall that the Fed determines the rate of inflation, which is likely to be about 2% regardless of whether policy is protectionist or not.” (02/13/17)