U.S. tariffs rise, but inflation fails to respond as expected
• Inflation from U.S. tariffs is delayed ?• The impact of tariffs on inflation and production costs
Inflation from U.S. tariffs is delayed ?
In the first half of 2025, U.S. inflation did not follow the market's expectations regarding the impact of tariffs, leading many to question whether the increase in tariffs is quietly driving inflation higher. According to estimates from the U.S. International Trade Commission (USITC), the average effective tariff rate rose to about 8.85% in June, a significant increase from previous months. Meanwhile, the import price index in May decreased by 0.4% year-over-year, indicating that foreign exporters are not inclined to lower prices to offset the tariffs. This reinforces the hypothesis that the tariff costs are being directly passed on to the prices of imported goods, exerting clear pressure on prices, and theoretically, could push inflation upwards.
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