00:00President Donald Trump said there is no inflation in the U.S. and also said without tariffs, the U.S. would only have a fraction of current investment.
00:11How accurate is his assessment of the economic picture?
00:15So Donald Trump likes to tout how much money the U.S. government is bringing in or can bring in in the future from these tariffs.
00:21He sees the tariffs as a key revenue tool and also as a negotiating tactic to improve the trade relationships with other parts of the world.
00:28And also, as we discussed, to bring manufacturing facilities, but also jobs back to the United States.
00:34But if you look at the actual figures released by the U.S. government, according to official data, in June 2025, tariff revenue reached 28 billion U.S. dollars.
00:42That's triple what it had reached in the same month the previous year.
00:45So, yes, tariff revenues are higher, have been higher in the previous year.
00:49Now, according to the Congressional Budget Office, it's an independent body within Congress that issues financial and economic reports.
00:56According to the Congressional Budget Office, the tariffs essentially will cut government borrowing by 2035, so over the next 10 years, by two and a half trillion dollars.
01:05Now, that's all good news and that all implies that what Donald Trump says is accurate.
01:10But then you have to take into account some of the other factors.
01:13For example, the CBO, the Congressional Budget Office, also says that tariffs could have a larger effect of essentially shrinking the economy, shrinking economic activity, because costs are higher for companies, so they hire less people, and essentially economic activity grinds down.
01:28The other thing is the tax cuts.
01:30We talked about the big, beautiful bill that was passed on July 4th.
01:33Massive tax cuts contained in that bill.
01:35So, potentially, the cost of the tax cuts to the U.S. government, along with the shrinking of the economy, could cancel out any revenue coming from the tariffs.
01:43So, the verdict's still out on that.
01:44On the second point to do with inflation, the last reading we had for the Personal Consumption Expenditure Index, that's the preferred measure of inflation, was 2.6% exactly.
01:53It's higher than the 2% targeted by the Fed.
01:55And last night, we heard from Jerome Powell, who said that he expects inflation to end the year around 3%.
02:00But he also said that he doesn't expect a large pass-through from the tariffs to inflation, basically saying that the feared impact from the tariffs on inflation hasn't materialized and doesn't look like it's going to materialize.
02:11So, on inflation, Donald Trump perhaps is right and has been vindicated because we haven't seen that spike in inflation.
02:17Whether the actual tariff revenue will indeed boost government revenue, I think the verdict is still out on that one.
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