Inflation slowed considerably last month in the US — but new tariffs on China could trigger another wave of price hikes as President Trump’s tumultuous trade war continues to cloud the economic outlook.
On Thursday, the White House confirmed that China’s total tariff rate is actually 145%, higher than the 125% previously reported. Despite Trump’s 90-day pause on reciprocal tariffs for non-retaliatory countries, that increase has pushed the overall US average effective tariff rate to 27% — the highest level since 1903.
That run-up is likely to trickle through to the US consumer, according to economists.
“If, in the short run, we have a big pullback in the supply of goods, that could show up in higher consumer prices,” Claudia Sahm, former Federal Reserve Board economist and current New Century Advisors chief economist, told Yahoo Finance in an interview on Thursday. “T-shirts could be the new eggs here shortly.”
On Thursday, the latest data from the Bureau of Labor Statistics showed annual core prices rose at their slowest pace since March 2021 last month, while monthly CPI prices fell for the first time since May 2020.
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