Why Trump's tariff threat worries the Federal Reserve more than in 2018: The last time there was a tariff threat, people were not used to raising prices. Now, after the high inflation from 2021 to 2023 (which the Federal Reserve misjudged as "temporary" at the time), businesses and employees have formed a "muscle memory" of demanding higher prices and wages. If the economy is in a state of excess demand, it will require more courage to determine whether the tariff increase is only temporary. Inflation expectations used to be as firm as dry concrete. But the current problem is: How wet is that piece of concrete?