Trump’s Tariffs Threaten to Spark Higher Inflation

President Trump’s plan to impose steep tariffs on imported goods could lead to higher inflation as prices rise in appliances, clothing, and furniture, according to new data showing a 2.7% increase in consumer prices last month.

The latest reading of the Consumer Price Index has accelerated inflation, with economists warning that the president’s trade policies could destabilize the US economy and rattle financial markets. The White House is downplaying the latest inflation gauge, which shows prices excluding volatile products like food and energy rose 2.7% from a year ago.

However, analysts predict that the tariffs could lead to higher inflation in the future, with some experts warning that an uptick in inflation could foreshadow more significant price increases. The European Union, Canada, Mexico, Brazil, Japan, South Korea, and Thailand could face sharp increases in taxes on their imports starting in two weeks.

Gregory Daco, chief economist for EY-Parthenon, estimated that the average tariff rate could increase to about 21% after August 1, which could result in a “major risk for the economy.” Daniel Hornung, former deputy director of the National Economic Council, said the data showed initial signs of tariff effects and predicted that those impacts would grow.

The prospect of severe blowback from Trump’s tariffs has prompted some economists to warn that the president’s policies could upend a healthy job market. Treasury Secretary Scott Bessent said the White House had begun the process to identify Mr. Powell’s replacement, even though his term does not end until May.

As the US economy faces increasing pressure from Trump’s trade policies, economists and analysts are warning of potential risks and challenges ahead. The Trump administration must tread carefully to avoid further acceleration in inflation, which could leave consumers and investors nervous.

Source: https://www.nytimes.com/2025/07/15/us/politics/trump-tariffs-inflation.html