> Prices rising due to tariffs isn't "inflation" in any traditional sense.

Yes, consumer prices rising is inflation in the traditional sense (since, unqualified, “inflation” refers to increases in consumer prices.)

> It's not driven by consumer demand,

Inflation is not restricted to demand-pull inflation, which is why the term “demand-pull inflation” has a reason to exist.

Tariff-driven price increases are a form of cost-push inflation.

> and therefore the logic for raising rates (i.e. slowing economic growth by reducing money in the market) doesn't apply.

The existence of cost-push inflation doesn't change the short-term marginal effects of monetary policy on prices, so of you care just about near-term price levels, the same monetary interventions make sense as for demand-pull inflation.

OTOH, beyond short-term price effects things are very different: demand-pull inflation frequently is a symptom of strong economic growth and cooling the economy can still be consistent with acceptable growth.

Cost-push inflation tends to be an effect of forces outside of monetary policy which tend to slow the economy, so throwing tight money policy on top of it accelerates the slowdown. This is particularly bad if you are already in a recession with cost-push inflation (stagflation).

The good thing, such as it is, about cost-push inflation where the cost driver is a clear policy like tariffs, is that while monetary policy has no good option to fix it, there is a very clear policy solution—stop the policy that is driving the problem.

The problem is when there is irrational attachment to that policy in the current government.

If a pair of shoes today costs $30, and a pair of shoes tomorrow costs $60 (not saying this will happen, just positing a scenario), from a consumer perspective, there has been 100% inflation in the price of shoes. It doesn't matter that the price increase is due to tarrifs on imports from Vietnam.

If the consumer price index, which is a metric the Fed uses, goes up, then inflation has gone up. Every dollar buys you less (less purchasing power), and the nominal price has increased. To me this indicates inflation. Of course, you need to calculate how this balances out in terms of jobs/wages and the flow of investment, but that's really hard to figure out at this point in time.

I'd expect the CPI to go up in the event of global tariffs at a baseline of 10% assuming all things go ahead as described.

Inflation is inflation.

The fact that we decided allow a massive tax increase by executive fiat is irrelevant. The fact that we’re risking a death spiral from decreased consumer demand via government imposed inflation is irrelevant.

You’re right in that the usual formula of turning the knobs on interest rates to ease economic challenges is unlikely to work. We may have to turn the knobs to prevent a total death spiral, however. Get ready for 16% mortgages.

It doesn't matter what the root cause of increasing prices is. Fed doesn't have any other levers but to adjust rates up to reduce demand. It will work either way because even if demand is not the source, it will reduce whatever demand that was there.

That's a distinction without a difference.

Oil price shocks in the 70s caused stagflation, a very real threat now.

The solution then was massive pain (Volker) that seemed to slay the beast.

>> rising due to tariffs isn't "inflation" in any traditional sense.

Perhaps not in an academic sense, but the vast majority of people understand inflation as a rise in the cost of living, no matter the root cause.

Actually, price increases caused by tariffs are a type of inflation—specifically, cost-push inflation. This is consistent with standard definitions found in macroeconomics and international economics textbooks.

Didn't stop the Fed last time, when inflation was due to market control letting companies pick their own price (also not "real" inflation).

Inflation is definitely going to happen due to tariffs. If I'm paying 20% more next year on average for products above what I'm currently paying that is 20% inflation for me, that is what people will see; they don't care about your purist form of inflation arguments. They also vote against people who cause inflation, especially when they promised the opposite.

It doesn't matter what causes inflation. It's always a sign that there's more money than is needed for current and anticipated levels of economic activity. And the correct course of action is always to raise the rates to reduce the pace that the money is printed at.

At least if you care about avoiding hyperinflation.

There's nothing in the definition of inflation that says it needs to be driven by consumer demand.

Coupled with tax cuts?