New Report: Tariffs Not to Blame for Inflation Says Council of Economic Advisers
Washington D.C., Wednesday, 9 July 2025.
The Council of Economic Advisers found that tariffs from the Trump era are not causing U.S. inflation. Imported goods’ prices have fallen faster than overall goods since February 2025.
Understanding Tariff Implications
A recently released report from the Council of Economic Advisers (CEA) indicates that tariffs, a policy legacy from the Trump administration, are not to blame for the current inflation rates observed in the U.S. economy. This finding challenges the widespread belief that such tariffs have significantly driven inflation. The report states that the prices of imported goods have been declining faster than the prices of all other goods since February 2025, suggesting that tariffs might not be a significant inflationary factor as previously thought [1].
Key Findings of the Report
According to the CEA report, from December 2024 to May 2025, the Personal Consumption Expenditures (PCE) import prices have risen by only about 0.2%, whereas overall PCE prices increased by approximately 1.1% [1][2]. This divergence illustrates that while imported goods prices had a marginal increase, overall goods prices showed a larger rise, indicating other factors contribute more significantly to inflation. The impression is that tariff-induced price hikes are not the primary inflation drivers at this time.
Impact on Economic Policy
The findings of this report have substantial implications for ongoing economic policy discussions, particularly those related to trade practices and inflation management strategies. Stephen Miran, Chairman of the CEA, states that the report clearly shows that from March 2025, imported components’ prices declined, while the prices of overall goods were relatively stable or slightly increased [1]. This insight might relieve some pressure on revising tariff policies amid fears of accelerating inflation, providing policymakers with a clearer focus on addressing other underlying inflationary forces.
Future Economic Implications
Despite the current findings, the tariffs remain a contentious subject, with future economic implications still uncertain. The White House has articulated that while tariffs have not yet caused overarching inflation, they remain vigilant due to possible delayed effects. The upcoming tariff measures set for August 1, 2025, against certain countries, including Japan and South Korea, could reshape these dynamics [2][3]. As discussions between the U.S. and its trading partners continue up to the deadline on July 9, 2025, the outcome of these negotiations will likely set the tone for economic relations in the coming months.