Where's the Inflation From Tariffs? Just Wait, Economists Say.
Tariffs raise consumer prices. It's a view held by most economists since long before President Trump entered the White House.
Prices rose when Mr. Trump imposed levies on China in his first term, though that did not translate to noticeably higher inflation overall. Forecasters have been bracing for months for it to happen again on a much larger scale, given that his tariffs this time are substantially larger and more widespread.
But data released this week showed that inflationary pressures remained more muted than expected at this stage, raising an uncomfortable question for economists: Are their predictions wrong?
Economists are undeterred — for now. It's not that tariffs aren't affecting prices, they say. It's that this isn't happening in a significant enough way just yet to show up in broad measures of inflation like the Consumer Price Index. They argue that the impact will be much more significant this summer.
'Inflation is very likely going to increase,' said Marc Giannoni, chief U.S. economist at Barclays, who formerly worked at the Federal Reserve's regional banks in Dallas and New York. 'It is a question of time, not so much of if.'
Mr. Trump's tariffs have already rippled through the economy in several ways.
Businesses rushed to stock up on products before levies were imposed, and now imports of foreign goods are down sharply. Uncertainty has skyrocketed, stoked by the administration's frequent pivots on its trade policy. On Thursday, it announced that steel tariffs would soon apply to appliances made with the metal, including dishwashers, washing machines and refrigerators.
+
10
%
Inflation
+
8
+
6
+2.8%
excluding
food and
energy
+
4
+2.4%
in May
+
2
0
–
2
'05
'10
'15
'20
'25
+
14
%
+
12
Inflation
+
10
+
8
+
6
+2.8%
excluding
food and
energy
+
4
+
2
+2.4%
in May
0
–
2
1965
'70
'75
'80
'85
'90
'95
2000
'05
'10
'15
'20
'25
+
14
%
+
12
Inflation
+
10
+
8
+
6
+2.8% excluding
food and energy
+
4
+
2
+2.4% in May
0
–
2
1965
'70
'75
'80
'85
'90
'95
2000
'05
'10
'15
'20
'25
Year-over-year change in the Consumer Price Index
Source: Bureau of Labor Statistics
By Karl Russell
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