President Trump could bask in a huge W. During the campaign last year, he promised to quickly reduce prices. He could now claim that he did it. Inflation fell to 2.3% in April, which is mainly in the normal beach. Most prices have stabilized. Some decrease. The inflation shock that started in 2021 is over.
But another inflation shock can happen, thanks to Trump himself.
While Trump has resumed his most aggressive prices on imports, important rates remain in place. And most economists expect these prices, which are a tax on imports, increase costs in the coming months and cause reinflation.
Find out more: What Trump’s prices mean for the economy and your wallet
The markets skyrocketed on May 12 after Trump and China agreed to defuse their trade war and their lower rates in the high sky that had been in place for a month. But it was not a return to normal. There is still a new price of 30% on most Chinese imports. And it is not final. The current agreement is in place in August. Trump Mercurial could still push the rates above.
There is also a new 10% tax on imports from most other countries. Plus a new 25% tax on steel, aluminum and imported cars. Overall, the average import tax increased from 2.5% before Trump increased to around 18%. Americans will pay the additional cost thanks to higher prices.
Some economists thought that price increases appear in inflation data in April. They did not do it. This suggests that we, the importers, made good work construction stocks before the entry into force of the prices and were able to keep the retail prices under control.
But higher prices arrive. Moody’s Analytics expects inflation from one year to another goes to 3.8% by June. Goldman Sachs provides maximum inflation of 3.6% in 2025. Other forecasts are similar.
It is not as bad as 9% inflation that burned consumers in 2022. But inflation which dates back to 4% is still problematic. THE Yale budget lab estimates that a global price leap of only 1.7% will reduce the average purchasing power of the household of $ 2,800 per year. Since pricing inflation will affect many everyday products, it will reach low -more proportional persons.
Prices will jump most for products from China, which are now faced with the highest rates. The Yale Budget laboratory provides price increases of 15% for leather items such as handbags, 14% for clothing and electronics, 11% for textiles and 9% for automobiles and basic pharmaceuticals. These are price increases expected for all products on the American market, not just imports; Indeed, higher import prices generally allow national manufacturers to increase their prices.
