US clothes, toy prices show tariff impact only at margins so far
For all the hand-wringing about tariffs, Americans are so far experiencing limited inflation from President Donald Trump 's protectionist trade policy.
For heavily imported goods like smartphones, new cars and clothing, price indexes are actually down since the Trump administration began implementing levies on key trade partners including China, based on data released Wednesday. Other categories including sporting goods and toys have risen only so much since February.
Companies may be finding ways to shield consumers from higher costs as they fear prices hikes — after years of lingering inflation — could lead to a pullback in demand. Some firms stocked up on inventories ahead of tariffs, allowing them to maintain pricing discipline, while others are absorbing some of the extra costs at the expense of lower margins.
Some may also be taking solace in Trump's decision to pause or lower some of the more punitive tariffs as the administration works toward trade agreements, which has bought companies some extra time to weigh price hikes.
Still, most economists largely expect businesses to start passing more of the trade costs this summer, with Walmart Inc. and Ford Motor Co. among the firms that are warning higher prices for consumers are coming. The CPI report also showed bigger increases in some tariff-exposed categories. An index of toy prices rose by the most since 2023, while major appliances posted the largest advance in nearly five years.
More broadly, the government's consumer price index report showed underlying inflation rose less than forecast for a fourth month in May. Goods costs, excluding the volatile food and energy categories, were flat compared with a month earlier.
'It is too early to declare victory and say that the significant increase in tariffs over the past few months will have no material impact on consumer price growth,' Wells Fargo & Co economists Sarah House, Michael Pugliese and Nicole Cervi wrote in a note after the report.
'Pre-tariff inventory building and anticipation that tariffs may eventually be dialed back are likely leading to some of the effects being delayed, and we see a particular risk of vehicle and apparel prices bouncing back in the near term,' they said.
Lawrence Werther and Brendan Stuart, economists at Daiwa Capital Markets, also expect tariff-related price pressures to emerge in the next few months, but 'ongoing trade negotiations, along with anchored longer-term inflation expectations, point to a one-off (and relatively short-lived) shift.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
France 24
5 hours ago
- France 24
California sues Trump for scrapping state's EV rules
"The President's divisive, partisan agenda is jeopardizing our lives, our economy and our environment," California Attorney General Rob Bonta said. "It's reckless, it's illegal, and because of it, we'll be seeing the Trump administration in court again for the 26th time." California, the nation's wealthiest state with around 40 million people, has long used a waiver in the Clean Air Act to set its own emissions standards as it tries to mitigate some of the worst air pollution in the country. Under that authority, which Bonta said has not been contested by successive Republican and Democrat administrations, the state plans to phase out the sale of gas-powered cars by 2035. The size of the automarket in the state -- and the fact that several other states follow its lead -- means automakers frequently use its standards nationwide. That is a source of irritation for Republicans who claim it is unfair that a Democratic-controlled state gets an effective veto on US rules. "Under the direction of the President, the Republican controlled US House of Representatives and the Senate illegally used the (Congressional Review Act) to target California's Clean Air Act waivers," said Bonta. "That's why we're asking the court to declare the resolutions to be unlawful and require the administration to implement the Clean Air Act consistent with the waiver as lawfully granted. "The bottom line is simple, the President doesn't have the legal authority to weaponize the CRA against California, and we won't let him use the CRA for his political gain." The lawsuit, which Bonta said was filed in the Northern District of California, came within minutes of Donald Trump signing the legislation. It also came as a row between Trump and California worsens, with the state's governor accusing the president of acting like a tyrant over his use of the military to control small-scale protests in Los Angeles.
Euronews
7 hours ago
- Euronews
How can the EU respond to companies moving their production elsewhere?
German BSH Domestic Appliances group, which owns the Siemens and Bosch brands, has announced the forthcoming closure of a factory in Esquíroz in the north of Spain. More than 650 local jobs are likely to be lost, and production could be relocated to Poland or Turkey. "The situation is really very worrying. This was a company that had proved to be sustainable, a company that had a product that provided services to the rest of Europe and also to Spain, because 80% of the products that came out of this company were then marketed in Spain," Spanish MEP Estrella Galán said. "And now the company has decided to close because of relocation," she added. This is not an isolated case. Relocations are also under way at Audi, Volkswagen and ArcelorMittal. Some MEPs would like the European Parliament to take action to combat deindustrialisation and support the re-industrialisation of Europe, at a time when geopolitical uncertainties are undermining businesses. "We have political instability, we have high energy prices, we have economic uncertainty, we have Donald Trump's tariff war," Oihane Agirregoitia Martínez, another Spanish MEP for Renew Europe, told Euronews. "In this case, we have a lack of strategic autonomy. These companies are looking for lower labour costs, they are looking for access to raw materials", Agirregoitia Martínez explained. She recommends simplifying the regulatory and tax framework to support production, innovation and competitiveness in Europe. For her part, Galán is calling for the 25-year-old European directive on collective redundancies to be updated to bring it into line with the "new realities of the labour market". "Within the European Union, we cannot compete between states on the basis of the wage levels that exist in one member state or another," she told Euronews. "It is therefore necessary to reform this directive on collective redundancies and prevent social dumping from being a threat to all workers in the European Union", she adds. Between 2018 and 2020, 72% of French companies that relocated did so in Europe, according to the French national statistics institute (INSEE). The 21-year-old gunman who went to his former school in Graz on Tuesday and shot 10 people dead and injured a further 11 had carefully planned his rampage in advance. That's according to a statement by the public prosecutor's office and the police at a press conference on Thursday. During a search of his house, investigators found a non-functional pipe bomb, notes and plans. According to police, the pipe bomb contained all the components. His notes express regret that he did not have time to properly finalise his plans. A farewell letter was also among the items found, but according to investigators, it does not provide any further information about the perpetrator's motive and reads more like an apology to his family. Investigators also revealed that the young man, who lived with his mother, had lived a secluded life. He was reportedly introverted, withdrew mainly into the virtual world where his main social contact came from and played first-person shooter games. Three years ago, he dropped out of school without graduating. The 21-year-old had no criminal record. Michael Lohnegger, the head of the Styrian state police, explained that the perpetrator entered the school on Tuesday at 9:43 am. He was carrying a rucksack containing a Glock 19 pistol, a sawn-off double-barrelled shotgun and ammunition. He went to the school toilet on the third floor, put on a gun belt, shooting glasses and a headset. There were 400 pupils in the school at the time. The gunman, then heavily armed, went to the second floor and shot indiscriminately at people there and at 10:07 am went back to the third floor toilet where he shot himself. The first police patrol arrived at the school at 10:06 am, by which time the rampage was over and the gunman already dead. Investigators assume that the 21-year-old did not know the young people he shot, although the teacher who was killed had taught at the school at the time the gunman was a pupil there. The police investigation is still ongoing, with a laptop and a USB stick still to be analysed. So far, there are no concrete clues as to the motive for the shooting.
France 24
8 hours ago
- France 24
Ukraine's Zelensky hopes to push Trump on US Russia sanctions at G7
In two rounds of negotiations in Istanbul, Moscow and Kyiv have so far only agreed large-scale prisoner exchanges, with Russia rejecting calls to halt its three-year invasion. Trump has urged both sides to strike a peace deal and shown increasing frustration with both Zelensky and Russian President Vladimir Putin for not having found a way to end the war. He has at times threatened new sanctions on Russia, which has ramped up its aerial attacks during the talks, but has so far failed to follow through. "I count on having a conversation" with Trump at the G7, Zelensky said at a press conference in Kyiv. "This sanctions package is very important... the final decision is still in the White House, it depends on the President of the United States," he added. US Republican Senator Lindsey Graham, a close Trump ally, is pushing what he calls a bipartisan "bone-breaking" bill to introduce a 500-percent tariff on countries buying Russian oil and gas, mostly targeting China and India. 'Appeasement' Tens of thousands have been killed since Russia invaded in February 2022, with millions forced to flee their homes as towns and cities across eastern Ukraine have been flattened by heavy bombardments. Trump's return to the White House has upended the West's vital aid for Kyiv. Europe has been left scrambling to see how it could fill any gap if he decides to pull US military, financial and intelligence support. German Defence Minister Boris Pistorius appeared to deliver a blow to those plans during a visit to Kyiv on Thursday. Speaking alongside Zelensky, he said Berlin was not planning to deliver Taurus long-range missiles to Ukraine. "Asked whether we are considering this, my answer is no," he told a reporter of the possibility of sending the missiles, which could allow Ukraine to strike deep into Russian territory. Instead, Pistorius announced 1.9 billion euros ($2.2 billion) in additional military aid. The setback came just after Ukrainian Foreign Minister Andriy Sybiga told a security conference in Rome that the "diplomacy of appeasement does not work with Russia" -- a veiled reference to Trump's soft approach towards Putin. "We want to end this war this year," he said. Russia has been advancing on the battlefield for months and launched record drone strikes at Ukraine in recent days. Two civilians were killed in the frontline Donetsk region in a drone strike on Thursday, Ukrainian officials said. Kyiv has responded to Russian bombardments with its own wave of drone strikes. In Russia's Belgorod region bordering Ukraine, a two-year-old child was killed following one such attack, Governor Vyacheslav Gladkov said on Telegram. POW swap The warring sides completed the latest stage of a prisoner swap on Thursday, freeing wounded soldiers in line with a deal struck at talks in Istanbul. "Today, warriors of our Armed Forces, National Guard, and Border Guard Service are back home," Zelensky said on social media. The two sides agreed to each free more than 1,000 prisoners of war -- all wounded or under the age of 25 -- and return the bodies of killed soldiers. Zelensky published pictures of the Ukrainian servicemen, all with freshly shaved heads, draped in national flags and smiling as they made phone calls and hugged people welcoming them at the border. "They all require medical treatment," as they were "severely wounded and seriously ill", Zelensky added. At the exchange, AFP reporters saw dozens of people -- mostly women -- waiting with pictures of their captured or missing relatives, hoping the freed soldiers could offer news about them. Russian state media showed Moscow's returned troops in uniforms chanting "Russia, Russia" with national flags around their shoulders. Russia later accused Ukraine of not being "ready to conduct exchanges" on a daily basis, as it said the two sides had agreed at the Istanbul talks.
