The Trump administration’s imposition of new tariffs this year has raised concerns about inflation, but prices have remained relatively stable across the US. Economists caution that while tariffs haven’t triggered inflation yet, there is no guarantee that prices won’t surge later.
There are four main reasons why inflation hasn’t jumped despite the high tariffs:
Firstly, the actual average tariff rate on US imports is lower than expected, with data showing a 9% average tariff rate in June, below the 15% forecast by many economists. This is because countries facing steeper levies have reduced their exports to the US, while those with lower rates are shipping more goods.
Secondly, many goods imported into the US have been exempt from higher tariffs, such as pharmaceuticals, electronics, and imports from Canada and Mexico. As a result, only 48% of $258 billion worth of imports were subject to tariffs in June.
Thirdly, retailers have built up their inventories before higher tariffs kicked in, allowing them to delay price hikes. However, experts warn that eventually, retailers will exhaust those lower-cost goods, leading to higher prices.
Lastly, tariffs tend to boost inflation gradually over time, peaking around a year after they take effect. The impact of US tariffs imposed this year is unlikely to have much of an impact on inflation until later this year and into 2026.
Source: https://www.cbsnews.com/news/us-tariffs-trump-inflation-prices