U.S. Inflation Eases Again Despite Trump Tariffs

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U.S. Inflation Eases Again Despite Trump Tariffs/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Inflation slowed for the third consecutive month in April, even as some Trump-era tariffs began taking effect. Consumer prices rose 2.3% year-over-year, the lowest since 2020, driven by falling grocery and gas prices. Economists caution, however, that the full inflationary impact of rising tariffs may still be on the horizon.

People visit an Apple store promoting its iPhone 16 at an outdoor shopping mall in Beijing, Sunday, May 11, 2025. (AP Photo/Andy Wong)

Inflation Slows Again – Tariff Impact Yet to Hit: Quick Looks

April consumer prices rose 2.3% year-over-year, down from March’s 2.4%.
Prices climbed 0.2% month-over-month; March saw a 0.1% drop.
Egg prices plunged 12.7%, leading grocery price declines.
Clothing costs fell, car prices flat, furniture up 1.5%.
Trump’s universal 10% tariff took effect in early April.
U.S.-China deal slashed tariffs from 145% to 30%.
Economists expect inflation to rise as tariffs bite later.
Federal Reserve faces dilemma: rising prices vs job growth.

A worker installs a platform near a Nike store outside a shopping mall in Beijing, Sunday, May 11, 2025. (AP Photo/Andy Wong)

U.S. Inflation Eases Again Despite Trump Tariffs

Deep Look

WASHINGTON, D.C. — U.S. inflation cooled in April for the third consecutive month, offering temporary relief to consumers and economic policymakers. But with President Donald Trump’s sweeping tariffs only beginning to affect supply chains, experts warn that higher prices may be around the corner.

The Consumer Price Index (CPI) rose 2.3% over the past year, the lowest annual increase since early 2020, according to the Labor Department’s Tuesday report. On a monthly basis, prices increased 0.2%, a modest rise following March’s 0.1% decline — the first monthly drop in five years.

What’s Driving the Decline?

The steepest price drops came from grocery items, with food-at-home prices falling 0.4%. Egg prices plunged 12.7%, contributing to the biggest drop in supermarket costs since September 2020.

Gas prices also dipped, helping to ease transportation costs, though Trump’s claim that prices dropped to $1.98 a gallon appears overstated. AAA reported a national average of $3.14 on Monday.

Other highlights:

Clothing prices dropped 0.2%
New vehicle prices remained flat
Furniture prices rose 1.5%, possibly reflecting early tariff impacts

Tariffs: The Calm Before the Storm?

President Trump’s 10% universal tariff and 25% duties on steel and aluminum took effect in early April, alongside new levies on goods from Mexico and Canada. But the immediate CPI report shows limited tariff impact — likely due to stockpiled goods and items already in transit.

Economists say tariffs are now averaging 18%, the highest since the 1930s. Though the U.S.-China deal announced Monday slashed tariffs on Chinese goods from 145% to 30%, duties remain elevated.

“There are no signs yet that tariffs are driving prices higher, but it’s just a matter of time,” said Laura Rosner-Warburton of Macro Policy Perspectives. “Companies are testing how much cost they can pass on to consumers.”

Where the Increases Are Coming

Some sectors are already seeing price pressures, particularly furniture and imported agricultural goods. Analysts expect additional hikes in clothing, shoes, and auto parts, as inventories deplete and businesses factor in higher import costs.

Furniture: up 1.5%
Auto prices: likely to rise after pre-tariff buying surge
Core CPI (excluding food and energy): up 2.8% annually

Household Impact and Political Ramifications

The Yale Budget Lab estimates current tariffs will add 1.7% to consumer prices and cost the average U.S. household $2,800 annually. For working families already stretched thin, even small hikes on basics like food or fuel will strain budgets.

Trump, however, has defended tariffs as economic leverage and a tool to narrow the budget deficit. He’s also counting on trade war revenue to fund sweeping tax cuts and industrial subsidies.

“Tariffs is the most beautiful word in the dictionary,” Trump said during a recent press conference.

The Fed’s Tightrope

With inflation near the Fed’s 2% target but still vulnerable, the central bank faces a dilemma. Higher tariffs raise the risk of stagflation — a mix of slower growth, rising prices, and job losses.

Fed Chair Jerome Powell acknowledged the challenge, noting that duties could require delicate balancing between rate hikes to combat inflation and cuts to support jobs if unemployment rises.