Since the first few weeks of Donald Trump’s second term, the president has shown a wholesale reimagining of the international trading system on a scale that has not been seen in decades, with mainstream economists warning that prices will rise.
From mainstream economists to mantras that everyone repeats Republican factionsit is obvious: tariffs are taxes on consumers. Businesses announce their plans in a recent New York Fed study transfer Some tariffs give customers fees.
But, by half of the year, by the greatest reorganization of trade half a century later, inflation of tariff fuels was missing in action.
Of course, the tariffs are in place: so far the Ministry of Finance has collected record-breaking $100 billion In customs duties, it is expected to increase by $300 billion this year. The tariff is Payment by US importers-think Walmart and other retailers – When goods cross the border and enter the United States, it takes some time to enter the system, but ultimately higher prices move to consumers. These higher prices directly affect the overall price level of inflation measures.
Apart from having a puzzle, wrapped in a puzzle, and covered in puzzles. Did no local tariffs appear? in inflation volume.
For four months, the Bureau of Labor Statistics’ official inflation reading volume has been expected, with the latest inflation rate being relatively read Moderate 2.4%. The Presidential Council of Economic Advisers (CEA) released this week Short It is believed that import prices have actually been falling.
Why doesn’t the data show tariff rates? This is the leading economist tells wealth.
It’s too early
Although the tariffs have been discussed for several months, it has actually been that long.
“With the impact of tariffs on prices, the CEA usage timeline is too short to draw any definite conclusions.” criticism In the study, prices in May were studied. “Trump’s 10% non-sales tariff is only levied in April.”
Steel and aluminum Effective in March and grew in June, while Chinese imports were taxed at 30% since March. Dozens of “reciprocity” tariffs originally announced in early April have now been postponed.
Meanwhile, official government price data takes time to collect and release. As of mid-July, the latest data on this data Consumer Price Index and personal consumption expenditure shrinker, Cover possible.
Large enterprises are storing
After the tariffs were announced, the importer was immediately anxious to introduce goods before the goods were higher. The business brought so many goods without corresponding sales that it briefly flipped the United States. GDP enters negative zone. (In economist mathematics, imports are counted as negative to GDP.)
This surge means that businesses can still sell goods that are brought in at the pre-tariff prices to a large extent.
“Companies stock inventory, and probably don’t have to raise the price of goods because of the goods on the shelves. Ultimately, they will, once they start raising prices, it will start to affect consumers,” said Eric Winograd, chief U.S. economist at Alliancebernstein.
No one knows how much it is to raise the price
Eugenio Aleman, chief economist at Raymond James, said uncertainty is the “most important reason” that has not shown the impact of tariffs.
He told him: “Business owners price the goods at the price of replacement costs. If the same goods must be purchased in the future, the price must be raised (collected to the customer),” he told him wealth. However, the problem is uncertainty. “Everyone knows that businesses will pay for alternative goods will be higher, but no one knows how much. This uncertainty prevents many companies from repositioning goods.”
It comes from profit
Businesses, especially small businesses, may choose to temporarily take tariffs. Unlike large businesses, they have a smaller customer base and may be reluctant to raise prices, Alman said.
“Maybe small companies are eating some of the tariffs. Why? Because they can’t afford to lose customers.” A potential data point shows that recent data from the Department of Commerce shows that all boss revenue growth (representatives to small businesses –The leveling of May. Alerman stressed that more than a month of data will be needed to determine whether this is the case.
Recent Bank of America Research shows that small businesses pay almost almost all tariffs in May Doubled since 2022 level. “In some ways, small businesses may be more susceptible to tariff pressure than large businesses,” the note reads.
They’re afraid of Trump
Another factor is the bully of the Truth Society, Trump has played his role freely even when the largest retailers consider the cost of hiking.
“If the president sees a lot of tariffs through prices, you will see more public policies, probably through twitter” Aristotle Pacific,Tell wealth.
Customers won’t pay higher fees
Klingelhofer previously suggested that companies bear the brunt because they are the only people who can afford it, and consumers are “phased out” after years of high inflation. Claudia Sahm, a former Fed economist, also noted that today’s companies are now rising prices faster than the pandemic inflation rate, when Americans were full of cash and eager to spend money.
In 2021 and 2022, “consumers up and down the income distribution have some cash and there are a lot of revenue calls from companies that say “we are going through these (fees), and consumers can handle it.” wealth.
Three years later, Americans spent all Excessive savings Cumulatively accumulated during the joint period, she said businesses “realize whether they will raise prices significantly and they may lose customers.” “More hesitation. The pandemic’s prices have increased a bit, but not.”
Inflation may never
This is Mark Everidgedo, US policy adviser compassa conservative economic clothing that supports tariffs to rebalance the U.S. economy.
“Foreign exporters end up absorbing a lot of (costs) and businesses, which rarely attracts consumers,” he said. He noted that Japanese automakers are cutting prices (sometimes nearly 20%) to make up for the extra costs our buyers will pay. In other words, “Japan itself and Japanese companies are taking the tariffs.”
Every economist wealth Talk to a certain version of this – the tariffs, rather than providing sellers with blank checks to raise prices, triggered complex negotiations between importers, exporters and ultimate U.S. buyers. How much time will take to find the balance of which party and will be individual to every good and sector of the economy.
“Tariffs are taxes on imported goods,” Salm said. “No one is willing to pay taxes, so who is the weakest link? Walmart can go in and tell their Chinese producers, ‘You have to lower the price.’ Maybe in the pandemic, consumers say, “Okay, I’ll pay – I’m not happy with it, but I have money.” ”
The final answer, she added, “may be very targeted at businesses, industries, and macroeconomic conditions in general.”
