A $100 billion mystery is unfolding on tariffs and inflation and economists are cracking the case

Alania, which everyone has repeated from the prevailing economists to the Republican Party factions, was clear: a tariff is a tax on consumers. The works said that the same thing, with three quarters of importers in a recent critical study in New York, declares that it intends to transfer some costs of customs tariffs to customers.

But in the middle of the year to the year, in the most promotion of trade in half a century, the inflation fueled by the customs tariff is missing at work.

Certainly, the customs tariff exists: The treasury has so far collected $ 100 billion in customs duties, and it is on the right path to withdraw $ 300 billion this year. Customs duties are paid by American importers – thinking about Walmart and other retailers – when the goods cross the border to the United States, it takes some time to work in the system, but eventually high prices are transferred to consumers. These higher prices directly affect the total price levels in inflation measures.

However, there is a mystery, wrapped in a mystery, and wrapped in a mystery. One -place tariff does not appear? In inflation numbers.

For four months, official inflation readings from the work statistics office are under expectations, with the latest inflation that reads 2.4 % relatively modest. The Economic House of Economists (CEA) has released this week a summary argument that import prices have already decreased.

Why not show data a tariff? This is what prominent economists said luck.

It is very soon

Although the definitions have been discussed months ago, they have not already existed for a long time.

“With regard to the impact of definitions on prices, the time frame that CEA uses is very short to extract any final conclusions,” said financially conservative National Tax Union in criticism from the study, which looked at the prices until May. “Unstable definitions were imposed by 10 % of Trump only in April.”

Definitions on steel and aluminum entered into force in March and increased in June, while Chinese imports are subject to a 30 % tax since March; Dozens of “mutual” definitions, which were initially announced in early April, were postponed.

Meanwhile, the official government price data takes some time to collect and issue. As of mid -July, the latest data for the consumer price index and personal consumption expenditures cover May.

The major companies are stored

Immediately after announcing the customs tariff, the importers rushed to bring the goods before they were subjected to a higher rate. Companies have brought many goods, with no corresponding sales, to the point that they have briefly turned over the US GDP to a negative area. (In economic mathematics, imports are negative for GDP.)

This increase means that it is still possible for companies to largely sell the goods that are offered under pre -conflict prices.

“The companies store inventory, and it is not supposed to have to raise prices on the goods because they are sitting on the shelf. In the end, and as soon as they start raising prices, they will start influencing consumers,” said Eric Winozrad, the chief American economist in Alliansbernstein.

Nobody knows how much prices are raised

The uncertainty, in one word, is “the most important reason”, the solid data does not show the effect of customs tariffs yet, according to Eugeneo Aleman, the chief economist in Raymond James.

“The prices of business owners are goods at an alternative cost. If they have to buy the same good in the future, they must increase the price [charged to the customer] If the replacement price is higher. ” luck. The problem, though, is uncertainty. “Everyone knows that the prices that companies will pay will pay for alternative goods will be higher, but no one knows the amount. This uncertainty prevents many companies from re -assembled their goods.”

It comes out of profits instead

Companies, especially small companies, can choose the cost of definitions at the present time. Unlike large companies, they have a smaller customer base and they may be reluctant to high prices, Aleman said.

He said, “Perhaps small companies eat a large part of the definitions. Why? Because they cannot lose customers,” he said. One of the potential data points that indicates that this possibility is the numbers of modern trade management that shows growth in the income of its owners – an agent for small companies – in May. Aleman confirmed that more than a month of data will be needed to determine whether this is the case.

Bank of America’s recent research showed that the amount of definitions paid by small companies in May has doubled almost from 2022 levels. “In some respects, small companies may be more likely to press customs tariffs than large companies, given that their arrival to capital is more limited,” this observation.

They are afraid of Trump

One of the additional factors is the Trump, which Trump used freely even in the greatest thinking in retail stores in long -distance hiking costs.

“If the president sees a great passing of tariffs across prices, you will see a lot of public policy, perhaps via Twitter,” said Jeff Kellhofer, the administrative director of Aristotle Pacific, said. luck.

Customers will not pay higher costs

Klingelhofer previously suggested that companies will take the impact of the tariff because they are the only one that they can afford, with consumer “exploitation” after years of high inflation. Claudia Siham, the former economy in the field of federal reserves, also indicated that companies today are the lowest speed in raising prices than they were during the amplifier of the epidemic, when the Americans were flowing with criticism and eager to spend.

In 2021 and 2022, “consumers are up and down in the distribution of income, they had some money, and there were a lot of calls to the profits of the companies that say,“ We are going through this [costs] Through, “the consumer can deal with it.” luck.

Three years later, the Americans spent all the excessive savings accumulated during Covid, and companies “realize whether they increase prices significantly, they may lose customers,” she said. “There is more hesitation. There is some price increase, but not abundance” for the epidemic.

Inflation may not come

This is the position of Mark Debllasido, American Kompass, a conservative economic outfit that supports definitions as a means of balance the American economy.

“Foreign exporters have ended with a lot of absorption [the costs]He said that the Japanese companies that reduce prices – sometimes approximately 20 % – to compensate for the costs of additions that American buyers will pay, “in other words,” Japan itself and Japanese companies deal with the costs of definitions. ”

Every economy luck He spoke with some version of this point – that the customs tariff, instead of giving an empty check to the seller to boost prices, prefer complex negotiations between importers, exporters and buyers at the end of the American. Finding a balance between the party pays the amount that will take time, and it will be individual for every sector and sector for the economy.

“The definitions are a tax on imported goods,” said Sahm. “No one wants to pay the tax, who is the weakest link? Lauren can enter and tell its Chinese producers,” You have to cut the price. “Maybe in the epidemic, consumers said,” Well, I will pay it – I am not really happy to do so, but I have money. ”

She added that the final answer: “It can be very specific for business and industry as well as general economic conditions.”