Steven Woldenberg

The lights on the financial system are flashing yellow.

None of this makes a whole lot of sense, but I suppose that maybe, you know, since last November, we've become immune or numb to all this insanity.

The average tariff rate in the first Trump administration went from about 1.5% to about 3%, which was a big proportional increase.

But I think there was a bit of a failure of imagination by economists when it came to the second Trump administration, where post-Liberation Day, we saw that average rate jump well over 20%.

With specific reciprocal tariffs on what he calls the worst offending nations.

The second thing that caught economists by surprise was that the really sharp increase that we just didn't predict in advance didn't have the type of impact that we thought it would have.

My guess is that if you told 100 economists that the average tariff rate was going to jump from 3% to well over 20%, many would have predicted a recession.

And that was, in fact, not what we saw.

So we learned a lot of lessons about tariffs.

And I think we learned three big lessons about why this increase in tariffs did not tank the U.S.

economy.

So the first lesson was that the time that the tariffs pass through to U.S.

consumers really matters.

So in the first Trump administration, you might remember that the president put in place a tariff on washing machines.

When we do this, a lot of manufacturers will be coming to the United States to build washing machines and also solar.

which meant that every American consumer paid about $90 more for every washing machine that they bought.

And that pass-through happened really quickly.

That was about a 12% increase, and that stayed there the whole time the tariffs were in place.

Data from financial analysis firm Thinknum shows prices of Whirlpool washers creeping up as its stock price slides.

There were also increases on dryers and dryers.