Even as some Republicans mocked economists for predicting prices would rise as a result of tariffs, there was a whistling-past-the-graveyard quality to the snickering. Yes, tariffs that had been threatened, delayed, and only partially implemented hadn't yet much increased costs for consumers, but there were clear signs that importers were rushing to beat high customs duties, and that trouble was on the way. Now we've had a weak jobs report and a higher-than-expected producer price index (PPI), and it's clear that tariffs perform just as we were warned: They raise prices for domestic businesses and consumers.
Price Increases Working Through the System
"Tariffs raise prices," Ryan Young, senior economist for the Competitive Enterprise Institute, commented last week after the release of the PPI. "Many of those price increases are still working their way through supply chains. That is why the Producer Price Index (PPI) is running hotter than the Consumer Price Index. It is a harbinger of things to come. It now looks much more likely that inflation will increase in the coming months, making the Federal Reserve's job even more complicated."
