Inflation data to reveal impacts of Trump's 'Liberation Day' tariffs
This week's inflation report will offer a first look at how President Donald Trump's "Liberation Day" tariff announcement has impacted pricing across the United States.
Trump's tariff escalation, announced April 2, set off fears among economists and consumers about a possible burst of inflation, since importers typically pass along a share of such taxes in the form of price hikes.
Government data, which will be published Tuesday, is expected to show that pricing has defied such worries – at least for now.
Economists expect prices to have increased 2.3% over the year ending in April, which would mark a slight cooldown from the prior month.
However, many analysts anticipate a rekindling of inflation over the coming months as retailers begin to replenish inventory with goods imported after the tariffs took effect.
MORE: Trump administration poised to accept 'palace in the sky' as a gift for Trump from Qatar: Sources
Even so, a rollback of some levies since "Liberation Day" may reduce the impact on inflation.
Trump paused a large swath of so-called "reciprocal tariffs" within days of the announcement.
On Monday, Trump temporarily slashed tariffs on China from 145% to 30%.
Levies on China will remain at the reduced rate for 90 days while the two sides negotiate a wider trade agreement, a joint U.S.-China statement said on Monday. China also agreed to temporarily cut its tariffs on U.S. goods from 125% to 10%.
The rollback of levies on Chinese goods is expected to reduce the average cost of tariffs per household this year from $4,900 to $2,800, the Yale Budget Lab found.
Still, the U.S. continues to impose an array of levies that have been issued since Trump took office.
An across-the-board 10% tariff applies to imports from nearly all countries. Additional tariffs have hit auto parts, as well as steel and aluminum. Duties remain for some goods from Mexico and Canada.
Speaking last week before the rollback of tariffs on China, Federal Reserve Chair Jerome Powell said the economy remains in "solid shape" but warned Trump's tariff policy could cause higher inflation and an economic slowdown.
"If the large increase in tariffs that have been announced are sustained, they're likely to generate a rise in inflation and a slowdown of economic growth," Powell said.
"All of these policies are evolving, however, and their effects on the economy remain highly uncertain," he added.
MORE: What's in the US-China trade framework?
Inflation levels are nowhere near 2022's peak of more than 9% -- though it remains slightly higher than the Federal Reserve's target rate of 2%.
The Fed last week opted to leave interest rates unchanged, keeping borrowing costs elevated as policymakers await the impact of tariffs.
Central bankers will announce their next interest rate decision on June 18. Investors peg an 88% chance of the Fed maintaining interest rates at current levels, according to the CME FedWatch Tool, a measure of market sentiment.
Inflation data to reveal impacts of Trump's 'Liberation Day' tariffs originally appeared on abcnews.go.com
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