Kimberly Adams

Households and firms might buy fewer big-ticket items and make fewer investments.

Companies might hold off on hiring.

In other words, the economy could slow down.

Researchers from the San Francisco Federal Reserve recently found that over the last 150 years, tariffs and all the uncertainty they create have led to lower economic activity and, as a result, lower inflation.

I will say that I actually don't find it that surprising.

That's Robert Johnson.

a professor at the University of Notre Dame.

He's also studied how tariffs can reduce inflation.

He says it's not just the uncertainty.

The president's trade policies are sending a message.

Johnson says being open to international trade allows countries to specialize on what they're good at, textiles or electronics or sophisticated technology.

And when a country focuses on what it's good at, Johnson says it makes more money.

And so if we close ourselves off to international trade, we lose the gains from that ability to focus our economic activities on the places and the things that we're best at.

Johnson says that can cause companies to start worrying about their own revenue in the future.

So they're going to spend less today.

And as a result of that, a lower amount of spending typically translates into lower inflation in the macroeconomy.

Another factor that's been holding back inflation is that many businesses are trying to avoid raising prices, so they're spending less on research, marketing, and employees.

Ed Gresser is director for trade and global markets with the Progressive Policy Institute.

But if the labor market keeps weakening, the economy could get stuck in a vicious circle.

Megan Schoenberger at KPMG says people who are concerned about their jobs look at a product that's getting hit with a tariff and decide it's just not worth it.