Why have "Trump tariffs" not increased American inflation? This explanation is increasingly being accepted by more and more people.

Despite facing the highest tariff barriers in nearly a century, economists are generally concerned that the inflation surge hasn't materialized in the United States. A widely accepted explanation is that due to extensive exemptions and changes in trade patterns, the effective tariff rate paid by importers is much lower than the officially announced level, thereby cushioning the direct impact on consumer prices. The latest research provides data support for this view. According to analysis by economists at Barclays Bank, the average tariff rate weighted by import volume in May was around 9%, significantly lower than the 12% previously estimated based on White House announcements. This finding reveals a partial reason for the resilience of the U.S. economy, as the actual impact of tariffs is milder than commonly believed. This phenomenon also explains why the increase in consumer prices hasn't been as rapid as some analysts expected. The impact of tariffs on inflation has long been a controversial topic, and President Trump also asserted this week that tariffs have not triggered inflation. However, while the overall inflation picture is better than expected, some prices for goods have already risen, with the latest wholesale price index posting the largest monthly increase in three years, indicating potential inflation pressures still exist. However, analysts believe that the current calm situation may be temporary. As existing tariff loopholes are closed and businesses begin to pass on accumulated costs to consumers, the full impact of tariffs on prices may not have arrived yet, and the economy will face new tests in the coming months. Exemptions explain inflation "puzzle" Barclays Bank's research shows that one reason inflation hasn't risen significantly is that many imported goods are actually not subject to tariffs. The bank's analysis of U.S. Census Bureau data shows that in June this year, only 48% of U.S. imported goods were actually subject to tariffs, thanks to numerous exemptions. The exemption list is broad, covering key goods such as drugs, certain electronics, and semiconductors. Moreover, many imports from Canada and Mexico are also exempt from Trump's so-called "reciprocal tariffs." Additionally, there are exemptions for goods that contain at least 20% U.S.-made components. It is these exemptions that allow over half of U.S. imported goods to enter duty-free, significantly lowering the overall effective tariff rate. Importers shift and inventory adjustments In addition to direct exemptions, importers' behavior adjustments have also helped lower the total amount of tariffs paid. JPMorgan economists pointed out that in June, the actual tariff rate was lower than the headline averages due to importers shifting to countries with lower tariffs or sourcing from domestic producers. The experience of Barry Roth, who is engaged in the import of used cars from Canada, confirms this point. He stated that prior to the tariffs taking effect, dealers stockpiled inventory in large quantities to avoid costs, causing his average monthly import volume to surge from 1000 vehicles to nearly 1500. Now, with many cars from Canada facing a 25% tariff, his monthly import volume has dropped sharply to 400 vehicles. This behavior of importing in advance to avoid tariffs has led to a short-term decline in import data, but as inventory is depleted, import demand may rise again. Barclays Bank economist Mark Cus pointed out that it is currently not clear whether it is possible to quickly decouple from major suppliers. Tariff impact may still be coming in the future Analysts warn that the current low effective tax rate may not be sustainable. Barclays Bank predicts that as existing loopholes are closed, the weighted average tariff rate could eventually rise to around 15%, significantly higher than last year's 2.5%. Estimates from The Budget Lab at Yale University's Policy Research Center suggest even higher effective average tariffs facing U.S. consumers at 18.6%. The White House has indicated that it will suspend the "lowest exemption" rule starting later this month, which previously allowed tax-free entry of packages worth less than $800 into the U.S. Furthermore, Trump has threatened to impose tariffs of up to 250% on drugs and 100% on semiconductors. These potential measures suggest that the greater impact of tariffs on the economy may still lie ahead. As importer Barry Roth said, as dealers sell off their inventory, they will either pay tariffs or face the dilemma of having no cars to sell, and in either case, price increases could occur, "It won't happen tomorrow or next week, but it will escalate gradually." Companies begin to pass costs on to consumers As the prospects for tariff policies become clearer, more previously hesitant companies are now indicating plans to pass on increased costs to customers in the coming months. Many companies were initially reluctant to raise prices because they did not want to alienate customers by frequently adjusting prices due to changing tariff rates. Aditya Bhave, an economist at Bank of America, said, "Companies are taking strategic measures to increase their prices." Randy Carr of World Emblem is a case in point, as his company imports uniform badges for U.S. law enforcement agencies and emergency responders. He revealed that the company initially absorbed over $1 million in costs to pay tariffs but did not raise prices. Now, with a clearer direction on the final tariff rates, his company will increase prices by 6% to 25% on badges manufactured in East Asia starting in September. "We feel like it's time to move forward," he said. This shift indicates that consumers may soon feel the true impact of tariffs on their bills.