The tariffs imposed on China earlier this year are already boosting consumer prices, according to a new paper from researchers at the U.S. Federal Reserve Board.
In the paper, Fed researchers noted that the existing methodologies for tracking inflation “are insufficient” to isolate the effects of tariffs on consumer prices — amid factors such as inflation expectations, supply chain disruptions, labour market effects and energy prices — in real time.
To address the problem, they develop a methodology for capturing the impact of import tariffs on personal consumption expenditure (PCE) prices in real time, which shows that “the 2018-19 tariffs on China passed through fully and quickly to consumer prices.”
Applying this methodology to the present, they conclude that “tariffs implemented on China in February and March of 2025 have already affected consumer prices.”
Specifically, they find that “the effect of these tariffs has been a 0.33 percentage point increase in core goods PCE prices, contributing to a 0.08 percentage point increase in core PCE prices.”
These findings don’t factor in the impact of retaliation by other countries and don’t consider the effects of U.S. tariffs on production or employment, they note.