I decided to do something special for my regular analysis of the new U.S. consumer inflation figures (for February) and what they say about President Trump’s tariff-centric trade policies. Mainly because we now have four months worth of data on the prices of goods sectors where imports from China are common, it’s become possible to take the best stab yet determining whether the Trump levies are hammering American households by making these products much more expensive.
The verdict? Some tariffs-led inflation here can be detected, but the statistics are still too imperfect, and the time-frame examined still too short to justify any firm conclusions.
At the same time, it remains clear that Mr. Trump’s metals tariffs, which have now been in place for eleven data months, have had little if any impact per se on consumer buying power.
Let’s examine the steel- and aluminum-related figures first, since there are many fewer products involved. Here are the data for the January-February period, and for April to the present (the stretch during which the metals tariffs have been in place), as well as the year-on-year numbers for April and February (which provide some indication of trends over time). As usual, the results for tariffs-affected products (e.g., canned foods) are presented along with those of control goods (e.g., non-canned foods) to glean further insights into the tariffs’ effects.
But here’s another new wrinkle: Rather than use the most popular “core inflation” measure for the biggest control group, I’m going to use a different measure: all items minus energy. The reason? The standard core inflation gauge strips out food and energy, because price changes in those categories are so volatile that they’re thought to distort the picture of fundamental inflationary or deflationary forces influencing the economy.
Yet many metals tariffs-affected products are food products. So for our purposes, the core group needs to be more narrowly drawn – and in this case, is comprised of all items minus only energy.
Jan.-Feb. Since April April y/y Feb. y/y
core CPI: +0.15 percent +1.76 percent +2.01 percent +2.07 percent
fresh fruits +0.72 percent +1.95 percent -0.43 percent +2.34 percent
fresh fruits: -0.27 percent -0.55 percent +1.38 percent -0.53 percent
fresh vegs: +1.86 percent +4.92 percent -2.50 percent +5.76.percent
processed fruits +1.42 percent +0.11 percent -1.29 percent +0.88 percent
canned fruits +2.12 percent +3.07 percent -0.14 percent +3.99 percent
canned fruits: +2.48 percent +1.91 percent -1.60 percent +3.09 percent
canned vegs: +2.23 percent +3.70 percent +1.00 percent +4.66 percent
soups: +0.39 percent +1.19 percent -0.38 percent -0.57 percent
malt beverages +0.73 percent +2.41 percent +0.84 percent +2.64 percent
consumed at home:
alcoholic -0.26 percent +1.14 percent +2.17 percent +1.36 percent
beverages consumed away:
non-frozen, non- +0.98 percent +3.46 percent -0.52 percent +3.52 percent
carbonated drinks: -0.19 percent +4.72 percent +0.04 percent +5.04 percent
juices & non- +0.98 percent +3.46 percent -0.26 percent +3.52 percent
new cars & trucks: -0.24 percent +0.66 percent -1.61 percent +0.29 percent
motor vehicle -0.09 percent +1.83 percent -0.74 percent +2.12 percent
appliances: -0.94 percent +3.44 percent +0.27 percent +6.80 percent
major appliances: -0.56 percent +6.86 percent +1.55 percent +11.08 percent
non-electric +0.25 percent -0.59 percent -1.57 percent +1.69 percent
cookware & tableware:
tools, hardware, +0.72 percent +1.49 percent +0.19 percent +1.98 percent
Something that becomes clear right away – the food price changes shown here demonstrate that they really are volatile. For example, from January to February, fresh fruits and vegetables prices together rose by 0.72 percent. The previous month, they fell 0.19 percent. Fresh vegetables prices have been on an even wilder roller-coaster – up 1.86 percent on month in February, down 1.66 percent on month in January. And unfortunately, this volatility can reduce the value of the year-on-year results.
The canned foods price volatility is impressive, too. Between January and February, the prices in the canned fruits, canned vegetables, and canned produce overall categories all rose more than two percent. But between December and January, the price of the first of these fell by 1.59 percent, the price of the second rose by just 0.45 percent, and the price of the third dipped by 0.05 percent.
And these products are where the strongest signs of metal tariffs-led consumer price inflation are found. So take the price acceleration revealed by the year-on-year data with a grain of salt. (No pun intended.). Also revealing: When you look at the cumulative price changes since the first metals tariffs were imposed (the post-April figures), some of these canned food categories exhibit stronger-than-core inflationary trends (the canned produce groupings and the drinks categories – which unfortunately also include many products packaged in glass and plastic bottles and cardboard containers) but some exhibit weaker pricing (like soups and alcoholic beverages consumed away from home – which also include many non-canned products). So there’s also abundant evidence that prices are mainly driven by something other than the metals in cans.
As for other products that use steel and aluminum, appliance prices keep increasing ever faster – but of course inflation in those categories has also been influenced by a separate set of tariffs imposed a year ago on large household laundry machines. The pricing trends for motor vehicles, automotive parts, non-electric cookware and tableware, and the tools and hardware categories, are decidedly mixed – which again undercuts tariff-centric interpretations of their inflation rates.
And now for the China tariffs’ effects. In part this post has been delayed because I actually went through the list of tariff-ed consumer (and other) goods published by the U.S. Trade Representative’s office in mid-September. The groupings of these products still often match up poorly with the groupings used by the Labor Department to track consumer pricing trends. Moreover, in many of these cases (especially the food products), imports from China are pretty modest. But the groupings aren’t entirely off, so I concluded these numbers are worth presenting.
What you see are the data for the latest month (February), for the post-September period (since October was the first full month these levies were in effect), and for October and February on a year-on-year basis. And as with the metals tariffs figures, the main control groups (like items minus energy) are presented as well.
Jan.-Feb. Since Oct. Oct. y/y Feb. y/y
core CPIU: +0.15 percent +1.76 percent +2.01 percent +2.07 percent
food: +0.40 percent +1.17 percent +1.21 percent +1.96 percent
frozen/freeze- +1.56 percent +0.47 percent -0.46 percent +0.95 percent
fish/seafood: +0.79 percent +1.85 percent +2.82 percent +4.44 percent
processed fish/ +0.41 percent +0.92 percent +1.46 percent +5.21 percent
frozen fish/ +0.78 percent +1.24 percent -0.15 percent +3.67 percent
fruits/vegs: +0.86 percent +1.83 percent -0.32 percent +2.03 percent
fresh fruits/ +0.72 percent +2.11 percent -0.38 percent +2.34 percent
fresh fruits: -0.27 percent +1.29 percent -1.40 percent -0.53 percent
fresh vegs: +1.86 percent +3.05 percent +0.81 percent +5.76 percent
processed +1.42 percent +0.79 percent -0.06 percent +0.88 percent
frozen fruits/ +0.81 percent -0.51 percent -2.72 percent -2.41 percent
non-carb, +0.98 percent +2.06 percent +1.23 percent +3.52 percent
personal care +0.55 percent +0.91 percent +1.52 percent +1.87 percent
household +0.31 percent +0.78 percent +0.69 percent +1.49 percent
recreation -0.86 percent +0.53 percent -3.51 percent -1.38 percent
men’s +3.27 percent -1.52 percent +1.47 percent +4.10 percent
women’s -2.51 percent -2.47 percent -5.08 percent -5.91 percent
computers, -0.94 percent -1.70 percent -4.09 percent -3.95 percent
window/floor -1.97 percent -2.39 percent +0.74 percent -3.53 percent
furniture & +1.20 percent +1.22 percent +1.26 percent +2.36 percent
appliances: -0.94 percent +0.17 percent +4.82 percent +6.36 percent
major -0.56 percent +1.83 percent +8.08 percent +11.03 percent
misc appls: -0.85 percent -1.04 percent +3.25 percent +4.38 percent
non-electric +0.25 percent +0.27 percent -0.51 percent +1.69 percent
tools/ +0.72 percent +1.91 percent +0.39 percent +1.98 percent
household +0.13 percent +0.41 percent +1.79 percent +2.94 percent
televisions: -3.23 percent -7.01 percent -17.95 percent -20.18 percent
misc video +0.71 percent +4.45 percent -3.87 percent +1.53 percent
pets & +0.55 percent +1.50 percent +0.91 percent +2.84 percent
sporting -1.90 percent +2.02 percent +1.71 percent +0.30 percent
photo equip -2.26 percent -1.24 percent -4.94 percent -4.12 percent
sewing +1.82 percent +9.76 percent -2.08 percent +6.10 percent
motor vehicle -0.09 percent +1.03 percent +1.25 percent +1.86 percent
tires: +0.25 percent +1.66 percent +0.03 percent +0.91 percent
stationery/ +1.60 percent +4.24 percent -6.48 percent -0.22 percent
Again, the short duration of these tariffs means that even the post-October and year-on-year results should be treated with major caution. And the prevalence of faster-rising food prices is clear from the table as well (although the modest level of tariff-ed imports from China further undermines the claim that trade deserves significant blame). Another complication that explains many of the diverging metals-related results, too: Different products operate in very different markets with highly distinctive features – including demand. Just look at the sportswear categories – where by most measures, pricing for men’s products is moving in exactly the opposite direction as pricing for women’s products.
The bottom line seems to be that, for price changes starting in October, only five of these 23 categories show increases above the core inflation rate, while 18 show below it. And one of those high inflation products was the major appliance category that’s also been affected by the washing machine tariffs.
Yet for year-on-year inflation rates, between October and February, the story looks very different. Price rises sped up (or price drops slowed down) in 18 of the categories, with greater price weakening characterizing the other five.
That’s why I believe that it’s still most responsible to adopt a wait-and-see approach to evaluating the China tariffs – along with the short time frame involved and the uncertainties over categorization. For the impact of the longer-lasting metals tariffs, however, claims of trade war-wreaked devastation just look even more and more far-fetched with each passing month.