Tag: Tariffs

For much of 2025, the Trump administration’s wide-ranging tariffs defied forecasts that the import duties would drive up inflation. But that reprieve appears to be over, with economic data this week showing the tariffs are now pushing prices higher. 

The Consumer Price Index in August rose at a rate of 2.9% from a year ago, accelerating from the previous month as President Trump’s tariffs filtered through the economy. Heavily imported goods saw some of the steepest price hikes last month, the data show. The increase represents the fastest rate of inflation since January, when Mr. Trump was inaugurated for his second term. 

Although the tariffs were first announced in April on what Mr. Trump called “Liberation Day,” their implementation was largely delayed as the administration negotiated new trade deals with multiple nations over the ensuing months. That gave U.S. companies time to prepare for the new import duties, which are paid by U.S. businesses directly to the federal government.

Facing the prospect of sharply higher tariffs, some American companies scrambled to stock up on the imported goods and parts they use in their business, postponing the need to raise customer prices. Others absorbed the levies instead of passing them along to consumers. 

But many companies are now pulling back from those strategies, economic data shows. According to the Federal Reserve’s latest “Beige Book” survey, which includes responses from businesses, economists and other sources, tariff-related price hikes were visible across the U.S. in August. 

Beth Hammack, president and CEO of the Federal Reserve Bank of Cleveland, recently told CBS News that some companies facing a hit to their profit margins have no choice but to start passing on tariff-related costs to consumers. 

Among the companies to say they are raising prices for some goods as tariffs take effect are home improvement giant Home Depot, retailer Macy’s and camera maker Nikon.

“The pass-through from tariffs is gradual because some businesses may have held on to a greater share of the costs and may have shared a greater burden of tariffs,” said EY-Parthenon chief economist Gregory Daco. “But there is a limit to how long and how much of that they can do — so there may be more of a push to pass those costs onto consumers.” 

The White House said inflation remains low and that Mr. Trump’s policies are boosting the economy. 

“Since President Trump took office, CPI is tracking at a 2.3% annualized rate, consistent with low and stable inflation,” White House spokeswoman Karoline Leavitt said in a statement to CBS MoneyWatch. 

Leavitt also noted that data on producer prices out this week point to a decline in wholesale inflation. “As the Trump economic agenda continues to take effect, the trillions of dollars in private sector and foreign investments, historic tax cuts, massive deregulation and energy dominance that the president is spearheading will fuel an economic boom,” she added.

Tariff-fueled price hikes

Many types of goods that rely heavily on imports saw significant price hikes last month, the latest CPI report shows. 

Coffee, for instance, is largely imported because there are only a handful of places in the U.S. where the beans can be grown, such as Hawaii and Puerto Rico. About 80% of unroasted coffee imports are sourced from Latin America, primarily from Brazil, according to the U.S. Department of Agriculture. 

Products from Brazil that are shipped to the U.S. now face a 50% tariff, according to the White House. Once those import taxes kicked in, U.S. consumers in August shelled out 21% more for beans than a year earlier, according to CPI data. 

Other products that are heavily imported and that, as of August, are seeing large price increases compared with a year ago include:

• Audio equipment: +12% 
• Household furniture: +10% 
• Bananas: +6.6%
• Women’s dresses: +6.2%
• Watches: +5.6%
• Motor vehicle parts: +3.4%

Strain on consumers

Prices are edging higher as worker wages are growing more slowly, straining lower-income households. 

“It’s troubling that so many basic necessities now cost more. Food, gas, clothing and shelter all had big cost jumps in August,” Heather Long, chief economist at Navy Federal Credit Union, said in an email.  “And this is only the beginning of the price hikes. The situation will worsen in the coming months as more costs are passed along to American consumers.”

Clara Moore, 44, a public-sector researcher who lives in Newark, New Jersey, told CBS MoneyWatch she is seeing prices “rising all over the place.” Her grocery bill has risen to about $250 per haul, from roughly $175 one year ago, she said.

Some economists think tariffs are likely to continue pushing inflation higher throughout the rest of the year, putting more financial pressure on families. As a result, many consumers will spend with more restraint, according to Daco. 

“They are more cautious when it comes to their outlays. They haven’t stopped spending, but they’ll be more judicious from one month to the next. They’ll adjust their spending according to what they need and what’s affordable,” he said. 

Moore said she’s had to cut back her spending on discretionary goods in order to afford the basics. 

“I’m in the process of cutting out all of my streaming. I stopped ordering anything from Amazon — any impulse buying I have cut out,” she said.

Ryan Sweet, Oxford Economics’ chief U.S. economist, said consumers should expect to pick up about two-thirds of the cost of new U.S. tariffs on foreign goods. 

“You’ll have a few of these increases spread out with each passing month, and you’ll see more of the tariffs passed on to consumers,” he said. 

Manufacturers in the U.S. are cutting thousands of jobs even as President Trump pushes economic policies that he says will revitalize the industry. 

Employers shed 12,000 manufacturing jobs in August, while payrolls in the sector have shrunk by 42,000 since April, according to a new analysis from the Center for American Progress (CAP) that draws on government labor data. 

The nonpartisan policy institute attributes that decline to the Trump administration’s steep new tariffs; hardline stance on immigration; and the Republican-backed “big, beautiful bill,” a tax and spending package enacted by Mr. Trump in July that CAP says hurts renewable energy companies by phasing out certain tax credits.

For all of 2025, manufacturing employment in the U.S. has sunk by a total of 33,000 jobs, according to Labor Department figures. Most of those job losses have been among companies that make durable goods, such as cars, household appliances and electronics. The drop comes as hiring overall has slowed sharply in recent months, with employers adding only 22,000 jobs in August, well below forecasts. 

The number of manufacturing jobs in the U.S. has declined for the past six decades, according to data from the Federal Reserve Bank of St. Louis. In 1960, manufacturing represented about 34% of total employment, while the number of jobs in the sector peaked in 1970 at 19.5 million. As of August this year, 12.7 million Americans were employed in manufacturing, while the industry lost 87,000 jobs in 2024, data shows. 

Uncertainty hurting businesses

When Mr. Trump in April announced a range of levies on dozens of other countries, the White House said tariffs would protect American workers by reducing the U.S. trade deficit with its economic partners and spurring employers to move manufacturing jobs to the U.S.

For now, however, confusion over the scale and scope of U.S. tariffs has put manufacturers on the defensive, increasing their costs and discouraging them from hiring, economist Sara Estrep, one of the authors of the CAP report, told CBS MoneyWatch.

“Companies are uncertain about what’s happening,” she said. “Everything has been changing on a day-to-day basis, so it’s not clear what production should look like. That’s why they aren’t hiring.”

In August, for example, farm equipment giant John Deere cited tariffs in announcing that its sales and operating profits had dipped from a year ago. In an earnings call, an executive with the company noted that it had racked up roughly $300 million in tariff-related costs, including on steel and aluminum imports. John Deere also announced it was laying off more than 200 workers at plants in Illinois and Iowa, according to AgWeb, a trade publication. 

Automakers pointed partly to tariffs in announcing nearly 5,000 job cuts in July, according to outplacement firm Challenger, Gray & Christmas, while it noted that the retail sector has also stepped up layoffs and store closures because of economic uncertainty.

Another factor fueling uncertainty for manufacturers are the ongoing legal challenges to the Trump tariffs, making it hard to plan and invest for the future, according to experts. 

A federal appeals court in August ruled that Mr. Trump unlawfully invoked the International Emergency Economic Powers Act, or IEEPA, to impose sweeping tariffs on U.S. trade partners. Mr. Trump on September 3 asked the Supreme Court to review the lower court’s decision before it takes effect in October. 

The outcome of the case leaves many manufacturers in doubt about how to proceed, making them reluctant to expand their workforce as they seek to control costs, Daco told CBS MoneyWatch. 

“The slowdown is symptomatic of an environment where purchasing managers are all under stress, and they are being squeezed by higher costs of goods and reduced demand,” said EY-Parthenon chief economist Gregory Daco. “And so in that squeeze, they are having to find ways to offset the higher costs, and one of the avenues to do that is to streamline their operations and make sure that they only have the essential talent on hand.” 

The White House did not respond to several requests for comment on CAP’s findings. The Office of the United States Trade Representative and National Association of Manufacturers, a trade group, didn’t immediately respond to a request for comment. 

Immigration effect

The Trump administration’s crackdown on U.S. immigrants is also weighing on hiring in manufacturing, said Daniel Altman, an economist and author of the High Yield Economics newsletter. 

“Immigration has been an important source of employment in manufacturing for some industries, and if you take away some of their labor supply, that’s just gives them more incentive to pursue automation and other forms of capital intensive manufacturing,” he told CBS MoneyWatch.

The government stepped up its campaign last week when Immigration and Customs Enforcement agents detained 475 immigrants, most of them Korean, at a Hyundai plant in Georgia because they were suspected of living and working in the U.S. illegally. 

Border patrol agents have also conducted raids targeting immigrants working in retail, according to CBS News. In sectors like farming, food processing and construction, undocumented immigrants make up to 20% of the workforce, according to Goldman Sachs. 

White House “border czar” Tom Homan on Sunday said the White House will expand such efforts.

“We’re going to do more worksite enforcement operations,” Homan told CNN. “No one hires an illegal alien out of the goodness of their heart. They hire them because they can work them harder, pay them less, undercut the competition that hires U.S. citizen employees.” 

Other long-term factors that go beyond the Trump administration’s policies are also contributing to the ongoing contraction in manufacturing jobs. During the pandemic, manufacturers invested heavily in technologies to automate their operations, Altman noted.

“We’ve seen a lot of automation, which mean companies do not need as many workers to provide the same output,” he told CBS MoneyWatch. “Output per worker has been increasing, and when we see that kind of increase in labor productivity, it usually means workers have access to more capital, or better technology or both, and that’s what you’d expect with automation.”