In 2022, as American inflation soared to heights unseen since 1981, prominent US Democrats spent much of the year blaming corporate greed. Forget the $5 trillion surge in the money supply or Washington’s runaway borrowing. No, they argued, inflation was really driven by businesses seizing pandemic and Ukraine-related supply chain disruptions to conspire, fleecing hapless consumers with unjustifiable price hikes relative to cost increases.

This greedflation narrative was always absurd. Competitive pressure inherently limits how much firms can charge customers. Meanwhile, overall spending was soaring, showing that customers themselves were supporting demand and paying those higher prices (hint: they had more money). Yet because profits temporarily increased in sectors where costs, especially wages, lagged inflation, businesses became scapegoats for excessive macroeconomic stimulus. President Biden joined in, attacking corporate “profiteers”.

I mention this because the American right is now concocting its very own greedflation myth — blaming businesses to cover for its disastrous policy mistake. President Trump’s economically illiterate “reciprocal” tariffs, announced last week, will inevitably push import prices higher. Yet, absurdly, his administration insists that these taxes won’t affect domestic prices and has even threatened legal action if businesses dare to raise prices in response.

Howard Lutnick, Trump’s commerce secretary, has said of the tariffs: “Foreign goods may become a little more expensive but domestic goods do not.” Nonsense. For starters, countless imports are essential inputs for American products. Taxing steel, energy and car parts obviously inflates costs for domestic manufacturers immediately, increasing prices. Yet Trump’s reciprocal tariffs go much further. Take vanilla from Madagascar, soon to face the additional 10 per cent new tariff. What does Lutnick think will happen to the price of ice cream, body washes, candles and protein powders?

Less intuitively, but as importantly, tariffs raise prices by pushing extra demand for domestic alternatives that America is relatively less efficient at producing. Impose a high enough tariff on bananas and you might well encourage American greenhouse banana farms. The problem is, this is a much worse use of scarce resources than growing other fruits or producing other goods.

That, as the George Mason University economist Alex Tabarrok has explained, is how tariffs undermine comparative advantage. It’s not merely that tariffs reduce competitive pressure on domestic companies by curbing consumer choices. They also tilt the deck, encouraging workers and capital to flow into less efficient activities, reducing wealth for higher priced goods.

Given these realities, it’s galling to hear Andrew Ferguson, Trump’s Federal Trade Commission chair, warn companies that tariffs shouldn’t be “a green light for price-fixing” and threaten vigilant oversight to ensure that firms are competing vigorously. Ferguson’s threats echo the greedflation rhetoric the Democrats used, obfuscating that Trump’s tariffs are the self-imposed supply shock that guarantees broad price increases across many sectors.

Such populism on pricing will only ramp up as the tariff effects ripple outward. Firms have scrambled frantically in recent weeks and days, stockpiling everything from tequila and canned foods to car parts and building supplies before the full tariffs kicked in. One inevitable consequence is that some businesses will report temporarily inflated accounting profits as they sell those inventories at new, higher prices. That’s when claims of “companies taking advantage” will take off.

Yet Chris Conlon, an industrial economist, notes that these profits mask the economic reality: tariffs will soon mean sharply higher future costs and tough supply-chain adjustments, raising prices now. Why else would importing firms be complaining about, rather than celebrating, Trump’s “liberation day”? Selling below market prices to appease Trump’s threats would crystallise more financial damage.

It’s ironic — tragic even — to see Republicans adopting the left’s deflection tactics on this. Whatever the excuses, Trump’s tariff policy is blatant economic self-harm. When the stock market plunge is followed by rising consumer prices, companies or cartels won’t be at fault. The only businessman to blame will be the occupant of the White House.