The National Interest - Where Is Donald Trump’s “Affordability Agenda”? March 24, 2026 By: Desmond Lachman

 The National Interest 

Where Is Donald Trump’s “Affordability Agenda”?

March 24, 2026

By: Desmond Lachman

The cumulative effect of the Trump administration’s Iran War, tariffs, fiscal policy, and Federal Reserve attacks will be greater inflation.

It would be a gross understatement to say that President Donald Trump has a major affordability problem in the run-up to the midterm congressional elections. By November, the Consumer Price Index will be higher than it was at the start of his second term. If the Iran War continues and the Strait of Hormuz remains closed, inflation will in all probability be significantly higher than this February’s 2.5 percent rate.

This means that Trump will see his party going to the congressional midterms with the overall price level at least 6 percent higher than when he started his second term. Worse yet, we could see considerably higher price increases for politically sensitive goods such as gasoline, groceries, health insurance, and electricity.

If there is one thing we can be sure of, it is that Trump will keep trying to shift the blame for today’s inflation to Joe Biden. However, this is likely to prove difficult given that Trump promised to lower the cost of living, and his fingerprints are all over our current affordability problem. He also boosted inflation with his aggressive trade policy. He has also fueled inflation by pursuing a reckless budget policy, undermining the Federal Reserve’s independence, and starting a war of choice that has led to both an energy and a food price shock.

Start with Trump’s trade policy. After many twists and turns, including the Supreme Court rejection of the administration’s national security rationale for the “Liberation Day” tariffs, Trump is now imposing a general import tariff of 15 percent on most US trade partners and a 50 percent tariff on steel and aluminum imports. That has led to the highest tariff level in the past one hundred years.

A recent Federal Reserve Bank of New York study found that some 90 percent of the tariff increases are borne by US companies and households, not by our trade partners, as Trump has claimed. According to the Yale Budget Lab, those tariffs are adding 1.3 percentage points to inflation. On numerous occasions, Federal Reserve Chair Jerome Powell has indicated that import tariffs are an important reason why inflation has remained above the Fed’s 2 percent inflation target. In turn, that has forced the Fed to pause its interest-rate-cutting cycle.