Well, that was fast. Last month, when the Labor Department’s consumer price data came out (for June), I observed that they revealed some tariff-led inflation – especially in goods categories that by all rights should be affected by the duties on steel and aluminum that President Trump imposed in March, 2018.
(More such evidence appeared in categories in which tariffs have been placed on Chinese imports. But as continually noted, because of several complications – e.g., shorter duration, great variations in metals-intensity, data classification issues – these results should be considered much less reliable than the metals tariffs statistics.)
Yet this morning’s new consumer price data, for July, shows a significant fade in tariff pricing pressures for the metals users. Part of the reason no doubt is the lifting of the metals tariffs on imports from Mexico and Canada. But they were removed only in late May, so it’s difficult to believe that this decision deserves most of the credit.
Here are the price increases for metals-using industries between June and July, since April, 2018 (the first full month in which the duties were in place), and the year-on-year figures for this June and July. Also included, as always, are statistics for various control groups of goods, including so-called “core inflation” (which strips out volatile food and energy prices), and for the foods and beverages that are sold in metal cans outside of these containers:
June-July Since April, 2018 y/y June y/y July
core inflation: +0.29 percent +2.79 percent +2.13 percent +2.21 percent
fresh fruits +0.60 percent +1.67 percent +0.86 percent +0.33 percent
fresh fruits: 0 percent -1.55 percent -1.85 percent -2.74 percent
fresh vegs: +1.28 percent +5.49 percent +4.09 percent +3.96 percent
processed -0.68 percent +0.04 percent +1.70 percent +1.45 percent
fruits & vegs
canned fruits: -1.56 percent +2.30 percent +3.93 percent +2.87 percent
canned fruits: -0.44 percent +0.99 percent +2.02 percent +1.89 percent
canned vegs: -2.33 percent +3.28 percent +5.28 percent +3.13 percent
soups: -0.18 percent +0.28 percent +0.30 percent +0.04 percent
malt bevgs +0.72 percent +3.13 percent +1.69 percent +2.58 percent
alcoholic bevgs +0.38 percent +1.90 percent +1.05 percent +1.43 percent
away from home:
non-frozen, non- -0.05 percent +2.99 percent +2.71 percent +2.33 percent
carbted drinks: -0.47 percent +3.39 percent +3.15 percent +3.14 percent
juices & non- -0.23 percent +3.11 percent +2.86 percent +2.62 percent
new cars/trucks: -0.19 percent +1.17 percent +0.58 percent +0.34 percent
motor vehicle -0.51 percent +2.07 percent +1.91 percent +1.42 percent
appliances: -0.83 percent +2.00 percent +2.56 percent +0.62 percent
major -0.98 percent +4.13 percent +2.94 percent -0.75 percent
laundry 0 percent +2.83 percent -3.98 percent -4.63 percent
non-electric -1.78 percent -5.14 percent -1.94 percent -2.94 percent
cookware & tableware:
tools, hardware, +0.62 percent +0.83 percent +1.06 percent +1.35 percent
The waning of inflationary pressures can be seen by comparing the core inflation rate since the advent of the metals tariffs with the inflation rates of the metals-using industries.
The latest data show that prices rose faster than that core rate in only six of the sixteen metals-using categories shown. Moreover, in four of these categories (beer and other malt beverages consumed at home; non-frozen, non-carbonated, non-alcoholic drinks; carbonated drinks; and all juices and non-alcoholic drinks), the results need to be treated with caution, since these products are also sold in non-metal containers.
The previous month’s data showed that prices rose faster than core inflation in ten of these metals-using categories – with the results in three complicated by the use of non-metal containers.
That total in turn was up from the nine of sixteen instances of relatively strong inflation in metals-using industries in both February and March (with the non-metal container issue muddying the waters for four of those nine categories in February and three in March).
As for the China-related evidence, I’m hesitant to examine it for the time being not only because of the aforementioned data issues, but because U.S. policy has changed so dramatically in the last few weeks – with the President in early August threatening ten percent tariffs by September 1 for a $300 billion tranche of imports from China that would have been dominated by consumer goods, and then today postponing their imposition until December 15 (or until a satisfactory bilateral trade deal is struck).
Nonetheless, the metals tariff-related data shows that inflation for these levies so far has never been especially strong (except, for a time, in large household laundry equipment – which had faced separate, product-specific duties since February, 2018), and whatever strength it’s shown, hasn’t lasted very long. (In fact, even for those laundry machines, the table shows that their super-charged price hikes are now turning into super-charged price drops.)
And of course, as Breitbart.com‘s John Carney keeps pointing out, the economy’s overall weak rate of inflation means that even when tariffs have pushed prices up, many other forces have been pushing other prices down. (Further, these low overall inflation rates almost by definition mean that price pressures from the existing China tariffs can’t be impressive, either.)
That’s not to say that Mr. Trump’s trade policies therefore can’t be hurting the U.S. economy in other ways (although the evidence to date here is also pretty feeble). And it’s entirely possible that the widely tariff-mageddon could still hit Americans on a variety of fronts if the trade war with China in particular lasts long enough. But inflation claims have always been central to the Trump trade critics’ case, as made clear by how quickly #tariffsaretaxes became a hashtag, and how it’s persisted. And if the critics have been wrong on this crucial score, why should anyone be confident in any of their other predictions?