Economists warn that the effects of tariffs won’t be immediately visible in economic data, despite President Trump’s claims that they’re boosting the US economy. However, subtle signs are emerging that tariffs are starting to show up in inflation and job market statistics.
Data from the Labor Department shows that prices rose sharply in categories affected by tariffs, such as toys and appliances. The job market is also starting to show cracks, with consumers pulling back on spending. Economists expect these effects to mount in the months ahead as companies use up inventories built before the tariffs took effect and pass costs to customers.
While the impact of tariffs has been slower than expected, economists attribute it to factors like consumer confidence and uncertainty surrounding trade policies. Companies are waiting for clarity on tariffs before raising prices, which means they’re shouldering most of the tariff burden, with consumers paying only a fraction.
The job market is losing momentum, with hiring concentrated in health care and local government, and manufacturing employment falling. Economists warn that this could lead to slower job growth, higher unemployment, and more modest damage from tariffs over time.
Historically, economists have struggled to predict recessions, but what’s clear is that the economy has less margin for error than it did during the pandemic recovery or Mr. Trump’s first term. The uncertainty surrounding tariffs and other policies makes it challenging to forecast economic outcomes.
Source: https://www.nytimes.com/2025/07/16/business/tariffs-recession-economists.html