Every fix for high prices is eating another fix

After the April ceasefire, gasoline fell 9.5 percent and June inflation slowed to 3.5 percent — the only price reprieve of the term with results on the record ^[1]. In July the president ended that ceasefire himself and announced a blockade of the Strait of Hormuz, cutting ship traffic to seven vessels and lifting Brent crude from about $72 past $86 ^[1]. The mechanism, once named, is simple: each fix is funded by another fix. Start with the checks. In November the president pledged a dividend of at least $2,000 a person, paid to everyone ^[2]. The same month, the Congressional Budget Office cut by $1 trillion its estimate of what the tariffs would raise for deficit reduction — and the cut traced partly to the very carve-outs meant to relieve prices.

Modifications to tariffs, which on net lowered the effective tariff rate (although rates on certain products were higher in November than they were in August), also reduced the estimated effect on the deficit. — Congressional Budget Office

The shortfall was flagged as complicating the dividend being promised ^[2]. By September the offer had grown to $5,000 ^[3]. The number more than doubled as the funding shrank. The legality was contested inside the administration from the start ^[4].

whether the dividend can be paid without Congress

The president: I believe we can do that without Congress.

His Treasury secretary: we need legislation for that.

The monetary arm pulls the other way. Governor Christopher Waller dated the buildup: core inflation was already rising before the oil shock, with the tariffs leaving price levels 0.3 percent above their pre-2025 trend ^[5].

core inflation began rising well before the oil price shock — Christopher Waller

In July the president demanded the Fed cut rates, while his own appointed chair, Kevin Warsh, has said he has no tolerance for elevated inflation. In September the Fed raised rates anyway — its first hike since 2023 ^[6]. Back at the pump, what replaced the ended fix. The administration waived sanctions on Russian oil, the waiver issued explicitly to stabilize skyrocketing energy prices after the war ^[7]. Ukraine priced the April waiver at roughly $10 billion handed to the adversary for its war.

every dollar paid for Russian oil is money for the war. — Volodymyr Zelenskyy

The $12 billion in farm relief meant to patch the tariffs was largely eaten by the war's diesel and fertilizer costs ^[8]. The Agriculture secretary framed it as a bridge to trade deals that have not yet arrived ^[8]. The carve-outs mint their own losers: an Iowa farmer says the subsidies have not offset his losses, and the beef carve-out stalls the rebuilding of the herds ^[9]. The human spine runs from May to October. In May, with inflation at 3.8 percent and gas above $4.50, the president said he thought about only one thing — keeping Iran from a nuclear weapon ^[10]. By October he was demanding Ukraine halt its refinery strikes, citing domestic inflation before the midterms ^[11]. The pattern began in March, when he postponed strikes on Iranian energy infrastructure — and prices briefly dipped at the pump ^[12]. The machine's output line as of mid-October: diesel averaging $6.31 a gallon, gasoline up 37 percent since the term began, and the strategic reserve at a record low of about 316 million barrels ^[13][1]. On October 24 the president cast his ballot and made the dividend conditional on a Republican Congress ^[14]. On October 25 supertankers hit mines in the strait — the most intense maritime attacks since March — and Iran's foreign minister warned that shipping through it would never be the same ^[15].

Iran is not able to do much now. And we could, if we wanted to, just take all of the oil. — Donald Trump

The feedstock that renews the crisis arrived on the same day the promise was being restated.