Cranes at the Port of Los Angeles, May 13. There’s mounting evidence tariffs are starting to bite American shoppers, after months of relatively stable consumer price increases.Mike Blake/Reuters
Economists have repeatedly warned that U.S. President Donald Trump’s push to Make America Great Again through tariffs will Make Inflation Hot Again.
Now, after months of relatively stable consumer price increases, there’s mounting evidence tariffs are starting to bite American shoppers.
Official inflation data released last week for June showed U.S. inflation climbed at an annual rate of 2.7 per cent.
And an innovative tool tracking the cost of thousands of goods by their country of origin shows how the steep tariffs on imports from China in particular are driving prices higher.
The Harvard Business School Pricing Lab uses real-time online pricing data from four major U.S. retailers to track the prices of more than 300,000 products over time, while using product code lookups and AI to determine their country of origin.
The lab monitors goods from Canada, Mexico, China and those produced domestically.
Businesses downbeat but less worried about worst-case tariff scenario, Bank of Canada surveys find
In an e-mail, Alberto Cavallo, founder of the Pricing Lab, said in normal times the pricing indexes would move lower over time because a lot of the products they track are household goods and electronics that get introduced at higher prices before being discounted.
In that way, goods from Mexico are the only ones following the long-term pattern, with others “deviating from their normal downward trend, and increasing significantly in the case of Chinese goods,” he wrote.
Commenting on the Harvard data in a note, Karl Schamotta, chief market strategist at Corpay, warned that prices for made-in-China goods “are likely to climb further in the months ahead as front-running efforts run their course and inventories are wound down.”
Decoder is a weekly feature that unpacks an important economic chart.