What is the measured inflationary impact of Trump’s tariff increases during his second term?
Executive summary
Measured estimates of the inflationary impact of President Trump’s second‑term tariff increases vary, but solid empirical research and market analysis point to a meaningful, if not catastrophic, effect: large‑bank forecasts put the hit to core price measures around 1.0–1.5 percentage points for PCE in the near term [1], an NBER study finds a 0.7 percentage‑point boost to inflation between March and August after the tariffs began [2], while some think the pass‑through to consumer prices has been smaller so far and effects may be delayed or concentrated in specific sectors [3] [4].
1. The headline numbers: what economists and researchers measure
Two of the clearest, contemporaneous quantitative signals come from industry research and academic work: J.P. Morgan Global Research estimates the announced tariff measures could boost Personal Consumption Expenditures (PCE) prices by about 1–1.5% over the year, with much of the effect realized in the middle quarters [1], while an NBER analysis concludes that the new import levies raised the U.S. inflation rate by roughly 0.7 percentage points between March and August of the tariff campaign [2]. Both findings frame the tariffs as a substantial contributor to headline inflation over months when the effective tariff rate surged.
2. How big did tariffs become — and why that matters for prices
The effective tariff rate climbed sharply after the announcements: Yale Budget Lab and news reporting show the effective U.S. tariff rate reached roughly the high‑teens — near 17% at one point in 2025, the highest since the 1930s — reflecting both headline rates and the actual mix of imports arriving in the market [5] [3]. That jump in the average import tax rate is central to why measurable inflation effects were observed: higher duties raise import costs for firms, which can pass costs into consumer prices or absorb them, affecting margins and investment choices [1] [6].
3. Disagreement over magnitude, timing and transmission
Not all authorities see large immediate price pass‑through. Some researchers argue tariff effects on inflation have been “milder than anticipated,” pointing to firms absorbing costs, front‑loading of imports before tariffs, and sectoral offsets — for example, some import price indexes and vehicle prices showed little net increase in 2025 [3] [7]. The Economic Policy Institute’s back‑of‑envelope estimates emphasize that pre‑existing tariffs and other non‑trade drivers explain much of recent inflation, and suggest removing earlier tariffs would have only modest one‑time effects (a top‑bound ~0.3 percentage‑point reduction in a past quarter) [8]. These contrasts reflect different methodologies (macro forecasts vs. micro import‑price pass‑through studies) and different time windows.
4. Distributional and fiscal side effects amplify the story
Beyond headline inflation, tariffs function like a tax that can redistribute costs across households and firms: independent analyses treat the tariff program as a significant fiscal transfer — Tax Foundation frames the package as a large tax increase per household (projected $1,500 on average in 2026) tied to higher import costs [9], while Prospect and other analysts note tariff revenues ballooned (approaching ~$300 billion in 2025 versus ~$80 billion in 2024), underscoring large transfers even if consumer prices rose less than feared [3]. Congressional and municipal analyses warn tariffs also risk shrinking GDP and raising prices in sectors sensitive to inputs [10] [11].
5. Legal uncertainty and the future path of measured impact
Measured effects to date are entangled with legal and behavioral responses: the Supreme Court litigation over presidential tariff authority could remove or curtail many measures, changing the effective tariff rate and future inflationary impact [12] [6]. Several analysts caution that some inflationary effects may be delayed — either because firms front‑loaded imports or absorbed costs initially — meaning measured inflation in 2026 could look different than 2025’s data [4]. In short, existing empirical work converges on a non‑negligible near‑term inflationary hit (roughly 0.7–1.5 percentage points depending on measure and period), but estimates differ by method, sector, and assumptions about pass‑through, offsets and legal durability.