Analysis of Fox Business Panel Discussion on Fed Study: Tariffs, Inflation, and Unemployment Impacts

The event centers on a Fox Business panel discussion [6] of an FRBSF working paper [3][5] analyzing 150 years of tariff data. The study found that tariffs act as aggregate demand shocks—lowering inflation but increasing unemployment—contradicting standard supply-shock models [1][2]. Key mechanisms include policy uncertainty reducing consumer/investor confidence and asset price declines cutting demand [1][4]. The study used narrative identification to isolate policy-driven tariff changes and cross-country data for validation [3][5].

1. Counterintuitive Result
   : Tariffs reduce inflation (2% drop for 4% tariff hike pre-WWII) but raise unemployment (1% increase) [3][4], opposite to standard models.
2. Policy Trade-off
   : Policymakers must balance inflation reduction against job losses [1][2].
3. Political Framing
   : The Fox panel framed the study as challenging Democratic tariff talking points [6], highlighting its potential use in political debates.

• Risks
  : Misinterpreting the study as final policy (it’s a working paper) [3][5]; ignoring retaliatory tariffs (not addressed in the study) [1][2].
• Opportunities
  : Informed policy debates considering both inflation and employment impacts; further research on long-term tariff effects [3][5].

The FRBSF working paper (released Nov 13, 2025) [3][5] is a non-final analysis using 150 years of data. It found short-term demand-side effects of tariffs outweigh supply-side price increases. The Fox Business panel discussion (Nov18,2025) [6] emphasized the study’s political implications. No specific investment recommendations are provided.