Zooming in on the prices of affected categories at a few large retailers, Alberto Cavallo of Harvard Business School and co-authors do discern some slight price rises in both imported goods and their domestically produced competitors (see chart 2). However, such prices have risen by only a percent or two\u2014a far smaller increase than that seen in tariffs. America\u2019s effective tariff rate is now at 12%, according to calculations by the Tax Foundation, a think-tank, its highest in nearly a century. Reverting to Mr Trump\u2019s initial Liberation Day offering would mean a significant step up.<\/p>\n\n\n\n
Oddly, though, tariffs may be pushing down prices via another mechanism\u2014by taking a toll on the economy. The Liberation Day drama crushed consumer confidence, possibly softening demand. Until recently, this has been evident only in \u201csoft\u201d data (surveys and the like). Now signs of it are starting to appear in \u201chard\u201d data, too. A recent release showed that household spending fell month-to-month in May. Employment figures for June were strong, but bolstered by government hiring, especially of teachers. Those for the private sector were lower than expected.<\/p>\n\n\n\n
A running estimate of GDP<\/small>, produced by the Fed\u2019s Atlanta branch, suggests that its core components <\/small>(private investment and consumption) have fallen from an annualised growth rate of 2-3% at the start of the second quarter to 1% now (see chart 3). Goldman Sachs, a bank, has compared the latest data to previous \u201cevent driven\u201d shocks that led to recessions, and found that today\u2019s slowdown is roughly in line with the historical norm.<\/p>\n\n\n\n
Read it all<\/a>.<\/p> Spotting a tariff impact on America\u2019s economy requires a microscopic look at the data. Whether slight price rises are the start of something more serious depends, in large part, on how punchy the president feels on Wednesday https:\/\/t.co\/Qq0TVCtGzq<\/a>
Photo: Getty Images pic.twitter.com\/oHfuhBbuGI<\/a><\/p>— The Economist (@TheEconomist) July 8, 2025<\/a><\/blockquote>