The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3% on a seasonally adjusted basis in June. A close look at the CPI data shows that many higher-cost imports are boosting overall CPI.
Prices increased for tariffed goods like toys and coffee that are largely imported from other countries, and they increased for goods like appliances and candy that are produced in the United States but cost more due to steep tariffs and tariff-rate quotas on sugar, steel, and aluminum.
Figure 1 shows the June price increases for many of these goods and the potential annual cost if price increases continue at this rate.
It’s important not to draw too many conclusions from one month of data. For example, the CPI report shows a decrease in new car prices. But, as tariffs on imported cars and parts, tariffs on raw materials like steel, aluminum, and copper needed to make cars in the United States, and potential broad-based tariff increases on imports from Japan and the European Union take effect, that relief is likely to be short-lived.
Even if none of Trump’s proposed new tariffs take effect, the impact of existing broad-based tariffs on prices will increase in the coming months. The initial impact of tariffs on prices was moderated as companies stockpiled inventory before tariff increases took effect. While some businesses may have been able to temporarily eat the cost of tariffs, eventually they will have to pass more of the cost along to their customers.
If left in place, Trump’s tariffs will be the largest tax increase measured in real dollars since World War II ended. And they will be a particularly damaging tax because they distort and weaken the U.S. economy, and they subject U.S. exporters to foreign retaliatory tariffs. National Taxpayers Union continues to endorse the alternative of zero tariffs, zero subsidies, and zero non-tariff barriers as the trade policy that will put Americans first.