After a several-month lapse, I finally had a chance to review in detail the latest batch of official U.S. consumer price data, which came out yesterday. The big takeaway seems as follows: Whereas through April there was no evidence that President Trump’s tariffs per se were pushing up consumer prices, now there’s some. But the evidence certainly doesn’t paint a picture of the American shopper’s living standards tumbling steeply because of Mr. Trump’s various trade wars.
As usual, let’s examine the metals-using industries, since the Trump tariffs on steel and aluminum have been in place for a relatively long period (April, 2018 was their first full month) and for reasons to be explained below, because it’s much easier to identify these sectors than those presumably impacted by the China tariffs.
The table below presents the relevant figures for major metals-using industries sequentially for the latest data month (June), since the duties’ onset, and year-on-year for the two latest data months. In addition, the results for control groups (like for overall core inflation, and for foods sometimes packaged in metal cans in their fresh forms):
May-June Since April, 2018 y/y May y/y June
core inflation: +0.22 percent +2.39 percent +1.99 percent +2.13 percent
fresh fruits -1.67 percent +0.31 percent +1.85 percent +0.87 percent
fresh fruits: -2.06 percent -2.85 percent -0.95 percent -1.85 percent
fresh vegs: -1.24 percent +4.10 percent +5.20 percent +4.09 percent
processed +0.39 percent +1.61 percent +1.28 percent +1.70 percent
fruits & vegs
canned fruits: -0.38 percent +4.47 percent +4.04 percent +3.93 percent
canned fruits: -0.09 percent +2.11 percent +1.00 percent +2.02 percent
canned vegs: +1.26 percent +6.04 percent +5.49 percent +5.28 percent
soups: +0.26 percent +2.59 percent +0.37 percent +0.30 percent
malt bevgs -0.62 percent +1.77 percent +0.84 percent +1.84 percent
alcoholic bevgs +0.20 percent +1.34 percent +2.17 percent +1.46 percent
away from hom:
non-frozen, non- -0.21 percent +1.96 percent +3.09 percent +3.03 percent
carbted drinks: -1.95 percent +3.33 percent +5.75 percent +2.71 percent
juices & non- -0.96 percent +2.49 percent +4.16 percent +2.86 percent
new cars/trucks: +0.17 percent +1.13 percent -1.61 percent +0.74 percent
motor vehicle +0.07 percent +2.60 percent +1.94 percent +1.91 percent
appliances: +0.21 percent +2.93 percent +2.43 percent +2.56 percent
major -1.40 percent +3.95 percent +3.80 percent +2.94 percent
laundry -0.70 percent +4.00 percent -1.55 percent -3.98 percent
non-electric +0.73 percent – 4.07 percent -5.22 percent -1.94 percent
cookware & tableware:
tools, hardware, +0.06 percent +0.12 percent +0.88 percent +1.22 percent
The most revealing comparison is that between the post-tariffs (April, 2018) rate of core inflation (which excludes the historically volatile categories of food and energy) and the inflation rates for the metals-using sectors. And they show that for the 15 metals-using industries tracked, prices rose faster than core inflation in ten – a sign of tariff-led price-hiking.
At the same time, as previously noted, the figures for three of these 10 groups – soups, carbonated drinks, and juices and non-alcoholic drinks – need to be viewed cautiously, because their packages are hardly restricted to metals. Thus my conclusion that the tariff effects have been modest.
And another interesting conclusion emerging from these statistics: the price of laundry equipment is dropping dramatically after surging following the imposition in February, 2018 of a separate set of levies on large household clothes washers and driers. These prices are still way up (by 13.75 percent) since the tariffs began. But the May and June data show unusually rapid price drops. And these decreases are much greater than the slight reduction in these tariffs that began this year.
As for the China tariffs, definitive conclusions remain difficult to draw for several reasons. Chiefly, the first full data month for the relevant duties (for consumer products) is only last October. The goods on the U.S. Trade Representative’s list for those levies are categorized with a classification system different from that used by the Bureau of Labor Statistics in measuring inflation – so the match-ups are far from exact. And the scale of tariff price effects can differ dramatically from product to product because China’s presence in a particular market can vary so greatly.
Another complicating factor (though clearly trade war-related): Some of the China categories have also been affected by the metals tariffs (e.g., auto parts). Further, the appliance categories have been impacted by the separate household laundry equipment duties.
Nonetheless, here’s the China data for May-June, since last October, and year-on-year for this June and last June. As with the metals tariff table, they include figures for control categories like the core inflation rate:
May-June Since Oct. June y/y 2017-18 June y/y 2018-19
core inflation: +0.22 percent +1.59 percent +2.13 percent +2.26 percent
food: -0.02 percent -0.12 percent +1.43 percent +1.91 percent
frozen/freeze- -0.42 percent +0.52 percent -0.23 percent -0.09 percent
dried prepared foods:
fish/seafood: -0.74 percent +0.89 percent +1.43 percent +1.66 percent
processed fish/ -0.98 percent 0 percent +0.39 percent +2.13 percent
frozen fish/ -1.32 percent -0.61 percent -0.91 percent +1.68 percent
fruits/vegs: -1.24 percent +0.03 percent +0.25 percent +1.04 percent
fresh fruits/ +1.67 percent -0.63 percent +0.62 percent +0.87 percent
fresh fruits: -2.06 percent -2.49 percent +1.87 percent -1.85 percent
fresh vegs: -1.24 percent +1.54 percent -0.82 percent +4.09 percent
processed +0.39 percent +2.49 percent -1.04 percent +1.70 percent
frozen fruits/ +1.84 percent +0.54 percent -3.88 percent +0.24 percent
non-carb/ -0.21 percent +0.61 percent -0.37 percent +2.71 percent
personal care -0.27 percent -0.59 percent -0.30 percent -0.60 percent
household -0.11 percent +0.13 percent -7.87 percent -0.03 percent
recreation -0.34 percent -2.49 percent -8.22 percent -5.60 percent
men’s -1.24 percent -2.94 percent -0.69 percent +1.53 percent
women’s -2.01 percent -1.25 percent -1.33 percent -0.03 percent
computers, -1.91 percent -4.09 percent -3.70 percent -5.86 percent
window/floor -1.19 percent -5.03 percent +0.43 percent -2.75 percent
furniture & +0.82 percent +2.64 percent +0.02 percent +3.15 percent
appliances: +0.21 percent -0.37 percent +1.15 percent +2.56 percent
major -1.40 percent +0.33 percent +5.62 percent +2.94 percent
laundry -0.70 percent -0.22 percent +13.12 percent -3.98 percent
misc +1.19 percent -0.84 percent -1.05 percent +2.28 percent
non-electric +0.73 percent -2.78 percent -2.64 percent -1.94 percent
tools/ +0.06 percent +1.27 percent -0.74 percent +1.06 percent
household -0.14 percent +1.14 percent +0.60 percent +1.52 percent
televisions: -1.23 percent -14.25 percent -19.09 percent -19.65 percent
misc video -1.98 percent -1.19 percent -2.53 percent -2.17 percent
pets & +0.08 percent +2.72 percent +0.67 percent +2.84 percent
sporting :+0.39 percent +2.79 percent +0.07 percent + 0.66 percent
photo equip +0.24 percent -2.04 percent -6.29 percent +2.72 percent
sewing +0.41 percent +8.21 percent +7.54 percent +4.63 percent
motor +0.14 percent +2.09 percent +0.29 percent +1.91 percent
tires: +0.15 percent +2.09 percent -1.56 percent +2.03 percent
stationery/ +0.59 percent +4.95 percent +1.16 percent -1.31 percent
Even given the above uncertainties, the bases for claims that the China levies are creating a tariff-mageddon for American consumers look awfully weak, though they’re not nonexistent. Chiefly, since the tariffs’ onset last October, only eight of the 30 affected products saw prices rising faster than core inflation.
At the same time, more product categories seem to be displaying such characteristics. This conclusion seems clear from the two sets of year-on-year statistics. Between June, 2017 and June, 2018, prices were stronger in only three of the 30 categories (including products for which prices were falling at a slower rate). Between the following Junes, their number grew to eight.
Similarly, forgetting about comparisons with the core, 23 of the 30 groups experienced higher inflation rates during the June, 2018-June, 2019 period (largely post-China tariffs) than during the June, 2017-June, 2018 period (entirely pre-China tariffs).
Of course, Mr. Trump’s trade policy, especially regarding China, has never been about economics alone. The administration has repeatedly emphasized that national security is at stake as well. But these new consumer price figures make clear that the economic costs paid by Americans have so far been meager. And especially with overall inflation so weak, they hardly look like reasons for the President to ease up on the trade front.