Tariffs drove core‑goods inflation

A new Federal Reserve study says tariffs imposed through November 2025 accounted for all of the extra inflation in core goods prices. (federalreserve.gov) The study, published April 8 by Federal Reserve economists Robert Minton, Madeleine Ray, and Mariano Somale, estimated that those tariffs raised core goods personal consumption expenditures prices by 3.1 percent through February 2026. It said the same tariffs added 0.8 percentage point to core personal consumption expenditures inflation overall. (federalreserve.gov) Core goods means consumer items such as appliances, furniture, clothing, and other merchandise, excluding food and energy. The Federal Reserve measure used here is personal consumption expenditures, the inflation gauge the central bank targets at 2 percent. (federalreserve.gov) The economists compared actual price moves with a model built from tariff rates, each category’s exposure to imported goods and parts, and an assumption that tariffs eventually show up in retail prices. They found the price effects built gradually and matched “full dollar-for-dollar pass-through” about seven months after tariffs took effect. (federalreserve.gov) That finding points to a specific story inside the broader inflation data. Chair Jerome Powell said on March 18 that core personal consumption expenditures prices rose 3.0 percent over the 12 months ending in February and that the elevated readings “largely reflect inflation in the goods sector, which has been boosted by the effects of tariffs.” (federalreserve.gov) The same research team had reported in May 2025 that the February and March 2025 tariffs on China had already pushed core goods prices up 0.3 percent by March 2025 and lifted core personal consumption expenditures prices by 0.1 percent. The new paper extends that work through the larger set of tariffs in force by November 2025. (federalreserve.gov; federalreserve.gov) The 2025 tariff wave included President Donald Trump’s April 2, 2025 executive order creating reciprocal tariffs and later April orders raising duties on imports from China during a retaliation cycle. A Congressional Research Service timeline says the United States and China announced a 90-day reduction in those April 2025 tariffs on May 12, 2025, cutting the April rates from 125 percent to 10 percent on each other’s goods while leaving other tariffs in place. (whitehouse.gov; whitehouse.gov; congress.gov) Not every Federal Reserve economist agrees on the size of the effect. A Minneapolis Federal Reserve note published the same day argued that the pattern of inflation across detailed goods categories does not line up cleanly with tariff exposure and said other forces must also be affecting prices. (minneapolisfed.org) The Board paper and the Minneapolis paper are asking slightly different questions. The Board authors estimated how much tariffs added relative to pre-2020 norms for core goods inflation, while the Minneapolis authors argued tariffs do not fully explain why overall core personal consumption expenditures inflation remains above the Federal Reserve’s 2 percent target. (federalreserve.gov; minneapolisfed.org) For households, the practical effect is that import taxes showed up in store prices for durable goods rather than being absorbed abroad. For the Federal Reserve, the result is a narrower inflation problem than the headline numbers suggest: goods tariffs pushed prices up even as housing inflation had moved back near its pre-pandemic pace. (federalreserve.gov; minneapolisfed.org; federalreserve.gov)