“Economists, researchers and analysts have warned that President Donald Trump’s sweeping trade policy of tacking steep tariffs on most goods that come into America will deliver a taxing blow to consumers via higher prices. However, recent months’ economic data has shown that overall inflation has remained fairly tame. Trump and members of his administration tout the positive economic reports as signs that tariffs are working. However, the chorus of concern is growing: Prices are moving higher, and economists say this is just the beginning. Here’s a look at the mechanisms behind why price hikes, and hotter inflation, are a slow burn: Tariffs have been applied in a staggered manner: The earliest tariffs went into effect in February (China, non-USMCA goods) and March (steel, aluminum), but the bulk were not announced or applied until April or later. Trade policy and tariffs are in flux: There have been plenty of instances where announced tariffs have been postponed, suddenly nixed, or unexpectedly increased or decreased in size. Shipping takes time: Sea cargo shipments can take weeks to more than a month to reach the US from other countries. Domestic supply chains take time, too: Once goods land on US soil, they don’t hit shelves the very next day. In addition to domestic transport times, the imported products (which are not always finished goods but rather parts and materials) have to still go through the manufacturing and production processes before being distributed to sales channels. Inventories were loaded up before tariffs hit: Near the end of last year, businesses frontloaded import orders to prepare for any disruptions that could come from a massive, and short-lived East and Gulf Coast port strike and also to get ahead of potential tariffs. Those stockpiling efforts surged this year as steep — and unexpectedly expansive — tariffs came into view and during periods in which they were postponed or lessened. Some costs are being eaten: First, foreign exporters are absorbing some of the added costs. A Goldman Sachs analysis puts that share at about 20%, meaning that the remaining 80% of higher costs from tariffs (which are added to the price of wholesale goods when they hit US soil) have been split between US businesses and US consumers. Goldman Sachs economists expect that eventually about 70% of the direct cost of tariffs will be passed onto consumers through higher prices. (However, that 70% could move higher, depending on how much domestic producers change their prices as well, according to the analysis).”

Prices are now starting to rise because of tariffs. Economists say this is just the beginning | CNN Business

“Tariffs are beginning to drive up consumer prices, and fewer imports will eventually mean fewer goods on store shelves. Small businesses especially are grappling with the ability to stay in business. We need binding trade agreements that open markets by lowering tariffs, not raising them. Tariffs are taxes paid by U.S. importers that will result in higher prices for U.S. consumers, less hiring, lower business investment and a slower economy.””

Import Levels Expected to Post Decline in 2025 Due to Tariffs