U.S. Inflation Climbs Amid Trump’s Tariff Policies

Today at 9:41 am

4459 posts

U.S. Inflation Climbs Amid Trump’s Tariff Policies/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. inflation accelerated in June to its highest pace since February, fueled by rising costs for gas, food, and goods affected by Trump’s sweeping tariffs. Consumer prices rose 2.7% year-over-year, intensifying political challenges for the president. The Federal Reserve faces pressure over interest rates as inflation trends upward.

U.S. Inflation Update Quick Looks

June inflation jumps to 2.7%, highest since February
Monthly inflation up 0.3%, driven by fuel, groceries
Core inflation rises to 2.9%, pressuring Fed decisions
Trump’s tariffs seen contributing to higher goods prices
Economists warn tariffs may fuel further inflation
Trump criticizes Fed Chair Powell for refusing rate cuts
Companies like Walmart, Mitsubishi raise prices due to duties
Fed remains cautious about rate cuts amid mixed signals

Deep Look

U.S. Inflation Jumps to Four-Month High, Heightening Economic and Political Pressures

WASHINGTON (AP) — U.S. inflation accelerated in June, reaching its highest level in four months and stoking economic and political tensions as President Donald Trump grapples with rising consumer costs amid his expansive trade policies.

The Labor Department reported Tuesday that consumer prices climbed 2.7% in June compared to a year earlier, up from a 2.4% increase in May. On a monthly basis, prices rose 0.3%, a marked acceleration from the modest 0.1% rise recorded from April to May.

The uptick marks the latest turn in a delicate economic balancing act. The sharp price spikes of 2022 and 2023 remain fresh in voters’ minds, having become a central issue in the 2024 presidential election that helped propel Trump back into office. Now, rising costs threaten to undermine the administration’s economic narrative and could complicate the Federal Reserve’s path on interest rates.

Core Inflation Also Moves Higher

Even after stripping out the often volatile costs of food and energy, so-called core inflation increased 2.9% year-over-year in June, edging up from 2.8% in May. On a month-to-month basis, core prices rose 0.2%, indicating inflation’s stickiness in key sectors.

Economists and policymakers track core inflation closely as a gauge of broader price pressures. Persistent core inflation suggests that the cost of services and other essentials remains elevated, potentially making it more difficult for the Federal Reserve to justify interest rate cuts that Trump has loudly demanded.

Tariffs Loom Large Over Inflation Picture

Economists attribute part of June’s inflation surge to the ripple effects of sweeping tariffs Trump has imposed since returning to the White House. The president has implemented:

A 10% tariff on virtually all imports
A 50% duty on steel and aluminum
A 30% levy on Chinese imports
A 25% tariff on imported cars

Just last week, Trump threatened to slap a fresh 30% tariff on goods from the European Union starting August 1. These protectionist measures are designed to bolster American manufacturing and reduce trade deficits, but they’re also injecting uncertainty into pricing across industries.

While the initial months of 2025 saw mild inflation, signs have emerged that the tariffs are starting to seep into consumer prices. Goods like furniture, appliances, toys, and tools became more expensive in May, partially offset by lower prices for airfares, hotels, and modest rent increases.

Industry Responds to Rising Costs

Major corporations are already signaling price increases to manage tariff-related expenses. Retail giant Walmart, the world’s largest retailer, indicated it plans to adjust prices in response to higher import costs. Mitsubishi announced a 2.1% average price hike across its vehicle lineup. Nike has also disclosed plans for selective price increases to mitigate tariff pressures.

Yet many businesses have tried to delay raising prices, hoping to avoid alienating consumers. Some firms stockpiled inventory earlier this year to cushion the impact of the new tariffs. Others are waiting to see whether trade negotiations might reduce or eliminate duties before passing costs along to consumers.

Trump vs. The Federal Reserve

The inflation uptick presents a thorny challenge for the Federal Reserve, which remains cautious about cutting interest rates too quickly. Trump has been vocal in his criticism of Fed Chair Jerome Powell, accusing him of failing to support economic growth by keeping rates elevated.

“Powell has been terrible and doesn’t know what the hell he’s doing,” Trump declared on Monday. The president suggested the economy was performing well despite the Fed’s policies but insisted lower rates would make it easier for Americans to afford homes and other big-ticket purchases.

White House officials last week also took aim at Powell over ballooning costs related to the multi-year renovation of two Fed buildings, which has climbed to $2.5 billion, roughly one-third more than initially planned. While Trump cannot legally fire Powell over policy disagreements alone, the Supreme Court has hinted that removal “for cause,” such as misconduct or mismanagement, could be possible.

Fed Walks a Tightrope

Fed officials, however, have signaled they intend to wait for clearer evidence before adjusting rates. Chair Powell has warned that tariffs could present a dual threat—raising prices while potentially slowing economic growth. That puts the Fed in a delicate position: raising rates could curb inflation but risk derailing the economy, while rate cuts could fuel even more price increases.

“If inflation comes in weaker than expected, Trump will undoubtedly renew calls for immediate rate cuts,” said Lydia Boussour, senior economist at EY-Parthenon. “But the Fed wants more certainty before making that move.”

Political Stakes Grow

The stakes for Trump are significant. The prior inflation surge under President Joe Biden proved politically damaging, contributing to deep voter dissatisfaction. Now, any renewed upward trend could undermine Trump’s credibility on economic management, particularly since he campaigned on swiftly bringing prices under control.

While inflation remains below the alarming levels of 2022 and 2023, the recent increase underscores how fragile the economic landscape remains. Consumers already grappling with higher living costs may face further price pressures if tariffs continue escalating, raising the prospect of new economic and political headwinds for the White House.