Economists Now Say Prices Will Continue To Rise, “This Is Just The Beginning”
As President Donald Trump intensifies his trade war with new tariffs on imports from countries like Canada, Brazil, and Vietnam, economists are sounding alarms about rising consumer prices and looming inflationary pressures.
While the administration insists that foreign exporters will bear the brunt of these costs, early evidence suggests American businesses and consumers are already feeling the pinch, with more significant impacts expected in the coming months.
Since April 2025, a minimum 10% tariff has been applied to most imported goods, following a brief pause in Trump’s “reciprocal” tariff policies.
On July 7, 2025, the President announced new tariffs as high as 40% on several trading partners, with a new deadline of August 1 for negotiations to avert even steeper levies.
Specific measures include a 35% tariff on Canadian imports and a 50% tariff on Brazilian copper, escalating trade tensions with key partners.
Retailers like Walmart have already confirmed price hikes tied directly to these tariffs.
On April 9, 2025, Walmart publicly attributed increases in consumer goods prices to the new import duties, a move echoed by Hasbro’s CEO, who warned of rising toy prices by fall 2025.
Joe Brusuelas, chief economist at RSM US, noted that companies’ profit margins are being squeezed, forcing them to pass costs onto consumers.
“We are beginning to see the impact of trade policy filtering into the hard data in such a way that it’s impossible to deny that it is now affecting revenues and profit margins for firms,” Brusuelas told CNN.
Inflation Remains Subdued—For Now
Despite these developments, overall inflation has not yet spiked dramatically.
The Consumer Price Index (CPI) for May 2025 showed an annual inflation rate of 2.4%, slightly up from 2.3% in April, but still below economists’ expectations of a sharper rise.
April’s CPI data recorded a 2.3% annual rate, the lowest since February 2021, suggesting that tariff impacts have been partially offset by factors like falling gas prices and weaker consumer demand.
However, economists caution that this calm may be temporary.
“Any time there is an economic shock, it takes a while for that shock to show up in consumer prices,” said Leo Feler, chief economist at Numerator, in a July 10 interview with BNN Bloomberg.
Retailers’ pre-tariff inventory stockpiles, built up before the April 2 tariff rollout, have delayed the full impact, but as these run dry, more expensive goods are expected to hit shelves as early as August 2025.
The Trump administration remains optimistic, arguing that tariffs have not significantly fueled inflation and that foreign exporters are absorbing the costs.
White House spokesperson Kush Desai stated, “The Administration has consistently maintained that the cost of tariffs will be borne by foreign exporters who rely on access to the American economy, the world’s biggest and best consumer market.”
A White House report published earlier this week claimed that imported goods prices have fallen since February, contradicting predictions of tariff-driven inflation.
Yet, many economists disagree.
Federal Reserve Chair Jerome Powell, speaking on June 18, 2025, noted, “We’ve had goods inflation just moving up a bit and, of course, we do expect to see more of that.”
Powell’s remarks align with broader concerns that tariffs could reignite inflation, potentially forcing the Federal Reserve to delay anticipated interest rate cuts.
Posts on X from July 1, 2025, highlight Powell’s statement that the Fed held off on rate reductions due to tariff-related inflation forecasts.
The International Monetary Fund (IMF) also expressed concern, noting on July 10, 2025, that U.S. tariffs, now at 100-year highs, are contributing to global trade uncertainty and could further slow economic growth.
The IMF slashed growth forecasts for the U.S. and other nations in April, citing these trade tensions.
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Consumer Impact and Economic Risks
While some goods, like toys and electronics, are already seeing price increases, the broader impact on American consumers is expected to intensify.
A CNN Business report from July 9, 2025, warned that prolonged tariff uncertainty could erode consumer confidence and reduce economic output, as seen in past trade wars.
Jamie Dimon, CEO of JPMorgan Chase, told Bloomberg News on July 10, 2025, that he is not counting on the U.S. avoiding a recession in 2025, citing tariffs as a key risk.
Retail sales data also shows signs of strain.
April 2025 retail sales grew by just 0.1%, down sharply from March’s 1.7% surge, as consumers pulled back in anticipation of higher prices.
Economists like Ben Ayers from Nationwide predict that April 2025 may mark the low point for CPI, with inflation likely to accelerate as tariff effects become more widespread.
Global markets have shown mixed responses.
On July 8, 2025, Asian stock markets rose after Trump extended the tariff deadline to August 1, signaling openness to negotiations.
However, U.S. stocks dipped slightly on July 10, with the Dow falling 166 points, as investors braced for a new wave of tariffs.
Reuters reported on July 11, 2025, that Trump plans to raise blanket tariffs to 15% or 20% on most trade partners.
The Canadian dollar weakened against the U.S. dollar following the announcement of 35% tariffs on Canadian imports, reflecting market concerns about trade disruptions.
While the administration touts the economic benefits of tariffs, including billions in revenue and potential boosts to U.S. manufacturing, critics argue the risks outweigh the gains.
“The levies are likely to reduce America’s economic output, as has happened before,” noted a July 8 CNN Business analysis.
Economists warn that sustained high tariffs could lead to a broader inflationary surge by late 2025, potentially weakening the labor market and slowing growth.
As the August 1 deadline approaches, the trajectory of prices and inflation remains uncertain, with businesses and consumers bracing for potential cost increases.
The coming months will be critical in determining whether the administration’s tariff strategy will deliver promised economic gains or trigger the inflationary wave economists fear.
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