Unless Howard Lutnick intervenes to say otherwise, the BEA will probably tell Americans what they already know on Friday: Consumer prices are in fact still rising in the US, albeit not as quickly as many Trump-loathing economists feared they might.

It’s not the case, as the Trump White House generally insists, that “there’s no inflation.” It is the case, perhaps, that tariff pass-through’s limited so far, and in that sense, Donald Trump might’ve been “right.” The scare quotes are there to remind you that Trump’s a reverse Lefty Ruggiero, as I’m fond of putting it. In the Hollywood adaptation of Ruggiero’s pitiable life as a Bonanno enforcer, he tells an undercover FBI agent that, “A wise guy’s always right. Even when he’s wrong, he’s right.” Trump, by contrast, is always wrong. Even when he’s right, he’s wrong.

There’s no better example of that than the tariffs. Tariffs are a bad idea. Objectively. It’s exceedingly rare that ideas can be objectively bad (or good, for that matter), ideas being kin to opinions and thereby not amenable to objective assessment. Or at least not in a strict sense. Some ideas, like some opinions, are more difficult to pitch than others (e.g., “Let’s go rob a coin laundry” is a tougher sell on a bored Saturday night than “Let’s go get some ice cream”), but “bad” is a normative statement. And normative assessments are inherently subjective.

Tariffs, though, run afoul of what it’s fair to call the most foundational concept in the history of human economic progress. I’ve been over this before. Trump’s trade barriers, and de-globalization in general, are tantamount to programmatic de-specialization. Trump’s effectively disavowing comparative advantage. That’s a really silly thing to do.

As Howard Marks put it earlier this year, “Every country has some things it produces better and/or cheaper, and others where the reverse is true” and in a system where every country focuses on what it does best, exporting its specialties and importing the specialties of other nations, “collective welfare is maximized thanks to increased overall efficiency.”

That’s just a fact. Trump’s fighting facts with his tariffs, and that’s always a losing battle in the end. He may be right, for now, that tariffs won’t drive a broad-based inflation surge, but the assertion that America can tax global commerce at 15% on average with no, or very little, impact on domestic price formation is fanciful.

That’s the context for a PCE report which is likely to show underlying inflation on the Fed’s preferred metric ticked up a fourth month in July. Economists reckon core PCE price growth at 0.3%. As the figure below reminds you, these monthly inflation readouts are moving in the wrong direction — just too slowly to make an issue of.

This is classic boiling frog. Note that the YoY pace is seen at 2.9%. That’d be the briskest since February, and nearly a full point above target.

“Friday holds the release of July’s PCE data but with core inflation estimates tracking at just +0.28%, the data is expected to offer no more than a reminder that while tariff pass-through has been evident in pockets of the consumer price landscape, there hasn’t yet been a broad-based spike in core inflation,” BMO’s Ian Lyngen remarked.

That’s fine. And it’s an accurate assessment. But… well, suffice to say that if the average US tariff rate’s sustained at ~quintuple the rate which persisted prior to Trump’s second term, something’s gotta give somewhere, eventually. Maybe it’ll come out of corporate profit margins (where Wall Street’s estimates are probably far too optimistic), maybe it’ll come out of consumers’ pockets (as corporates pass along the costs) or who knows, maybe Trump’s right and exporters will accept a larger and larger hit to their own selling prices if it means preserving access to the US consumer.

But again: Somebody, somewhere’s gotta pay. Tariffs are a tax, after all. And even in a “best” case scenario where US consumers are spared the hit, trade barriers will work to everyone’s detriment over time. If we disavow specialization, prices for most of the goods we consume will be higher and the quality of those goods will be lower than under a system based on comparative advantage. That’s not an opinion, it’s a fact, and that means Trump’s tariffs are an objectively bad idea.

Of course, the Fed’s now compelled to ignore the inflationary implications of tariffs on the way to cutting rates starting in less than a month. In Jackson Hole late last week, Jerome Powell said that “the effects of tariffs on consumer prices are now clearly visible” and reiterated that the Fed “expect[s] those effects to accumulate over coming months.” But it doesn’t matter. They have to cut. Because Trump says so. It’s just that simple.

The PCE release will likely also show a meaningful pickup in consumer spending which, if realized, would be more evidence testifying to the peril of aggressive rate cuts, particularly with the “wealth effect” from record-high equities underpinning consumption among households fortunate enough to own financial assets.

Also on the US docket in what’ll surely feel every bit like a lethargic pre-Labor Day trade: Conference Board confidence (Tuesday), the second estimate of Q2 GDP (Thursday), pending home sales (Thursday) and the final read on University of Michigan sentiment (Friday).