Tariffs and inflation pressure
A survey and reports suggest tariff refunds are unlikely to benefit consumers, and a Federal Reserve study says tariffs were a major driver of excess inflation in core goods during 2025. Separately, President Trump threatened 50% tariffs on China as part of a broader geopolitical posture tied to Iran, adding more uncertainty to cost and pricing dynamics. (cnbc.com, reason.com)
The tariff fight is turning into a price fight: new Federal Reserve research says 2025 tariffs drove the entire burst of excess inflation in core goods. (federalreserve.gov) In an April 8 note, Federal Reserve economists estimated tariffs in place through November 2025 raised core goods personal consumption expenditures prices by 3.1% through February 2026. They said tariffs added 0.8% to core personal consumption expenditures overall and that pass-through to consumers now appears “effectively complete.” (federalreserve.gov) That means the people who paid the tariffs at the border were not the only ones carrying the cost. A March 5 Federal Reserve note found retail prices climbed gradually during 2025 as stores adjusted tags over time rather than all at once. (federalreserve.gov) The refund debate does not change that basic mechanics. Tariffs are collected from the importer of record, and legal analyses say any government refund would go to that importer, not automatically to the shopper who bought the finished product. (ballardspahr.com) A new CNBC Chief Financial Officer Council survey found finance chiefs do not expect consumers to get money back even if companies recover tariff payments. The report followed a Supreme Court ruling that struck down a large share of Trump’s tariff agenda and a later court order telling the government to prepare for potentially billions of dollars in refunds to importers. (cnbc.com) Other estimates put the refund pool at a far larger scale. The Penn Wharton Budget Model said on February 20 that reversing the International Emergency Economic Powers Act tariffs could generate up to $175 billion in refunds. (budgetmodel.wharton.upenn.edu) Companies have been signaling for months that tariff costs were moving downstream. KPMG said the share of organizations passing through more than half of tariff-related costs to customers rose from 13% in May 2025 to 34% in February 2026. (kpmg.com) Now the White House is adding a fresh layer of uncertainty. On April 13, President Donald Trump threatened a 50% tariff on China after a report said Beijing was preparing an air-defense shipment to Iran, though CNBC noted that report was unverified and Trump’s follow-through was also unclear ahead of a May summit. (cnbc.com) Trump had already widened the threat on April 8, saying the United States would impose 50% tariffs on “any and all” goods from countries supplying military weapons to Iran. China has previously said it would retaliate against new tariff escalation from Washington. (cnbc.com, cnbc.com) So even where courts may unwind old tariffs, the inflation story is not simply reversing. The Federal Reserve’s latest work says the 2025 price increases already landed in core goods, and the next round of tariff threats is arriving before households have fully escaped the last one. (federalreserve.gov, cnbc.com)
