Despite a barrage of new tariffs imposed by the Trump administration this year on dozens of U.S. trade partners, the prices of goods and services across the U.S. have defied many economists’ expectations and remained relatively stable.
Economists caution that just because tariffs have yet to trigger a renewed bout of inflation, there is no guarantee that prices won’t surge later this year. They note that recent data shows a modest rise in the cost of items including clothing, home furnishings and appliances.
Tariffs — meaning the rate importers must pay at the border for imported goods — also take a long time to seep into the economy. That’s because companies often try to hold off on passing along higher costs to customers to avoid losing market share to rivals.
Yet experts acknowledge that tariffs have yet to unleash the kind of severe inflationary pressures that could cause prices to spike. For their part, White House officials have consistently maintained that foreign exporters — not American consumers — will bear the brunt of added tariff costs.
“Despite the doom-and-gloom predictions of inflation and recession, it’s been months since Liberation Day, and inflation is trending towards an annualized rate not seen since President Trump’s first term, while a recent [Council of Economic Advisers] analysis found that prices of imported goods are actually declining,” White House spokesman Kush Desai said in a statement to CBS MoneyWatch, alluding to the baseline and other tariffs President Trump originally announced on April 2.
Here are four reasons economists say explain why inflation isn’t jumping despite the highest U.S. tariffs in decades.
Tariffs aren’t as high as many people expected
Despite President Trump’s many threats to jack up levies on imports, the actual average tariff rate being charged on U.S. imports is not as high as what has been announced, data shows.
The average tariff rate on U.S. imports in June was 9% — well below the 15% that many economists were forecasting earlier this year following Mr. Trump’s slew of tariff announcements, according to investment advisory firm Capital Economics.
“It’s not so much that the reaction to tariffs has been low, it’s that the effective tariff rate increase has been relatively limited up until June,” Mark Cus, an economist at Barclays, told CBS MoneyWatch.
Actual U.S. tariffs remain lower than earlier estimates in part because countries facing steeper levies…
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