Tariffs’ Impact on Inflation: An In-Depth Analysis

Bassyonni

Published: February 1, 2026 7:15 AM ET

Tariffs’ Impact on Inflation: An In-Depth Analysis

Recent discussions have focused on the impact of tariffs on inflation, drawing attention to key economic trends. This analysis sheds light on how tariff rates affect inflationary pressures, quantifying their effects based on current economic data.

Understanding Tariffs and Their Effects on Inflation

Tariffs are taxes imposed on imported goods, intended to protect domestic industries. However, their influence on inflation can be complex. The relationship between tariff rates and inflation is often misconstrued by both economists and policymakers.

Trends in Tariff Rates

Effective tariff rates have not risen in tandem with headline rates. For instance, major exemptions exist, such as Apple’s tariff relief on imports from India. Additionally, companies have utilized existing exemptions to mitigate the financial burden, leading to a less dramatic increase in effective tariff rates.

Impact on Customs Duties

Before the Trump administration, customs duties accounted for 0.3% of GDP.
Post-implementation of tariffs, this figure rose to 1.1%, indicating an increase of approximately 0.8 percentage points.

This rise in customs duties can provide a preliminary estimate of inflation attributed to tariffs, suggesting an inflation increase of around 0.8% or slightly more due to these economic measures.

Actual Inflation Rates Compared to Expectations

The HBS Pricing Lab estimates that tariffs have elevated the Consumer Price Index (CPI) by 0.8 percentage points.
Forecasts prior to the tariff increases predicted a core PCE inflation rate of 2.2% for 2025; current projections suggest a rise to 3% for that year.

Both methods indicate a consistent 0.8 percentage point increase in inflation linked to the tariffs. This correlation aligns with the increase in customs duties as a share of GDP, revealing a relatively predictable effect.

Conclusion: No Major Surprises

The analysis indicates that the anticipated inflationary impact of tariffs has been largely consistent with economic predictions. While some debate remains, the real-world data suggests that tariffs have contributed to inflation but not to the extent previously feared. The complexities of the economy continue to unfold, but the current evidence aligns well with expectations regarding tariffs’ influence on inflation.