President Donald Trump’s “Liberation Day” tariffs, unveiled in April 2025, have triggered renewed debate over their inflationary impact. While Trump argues the levies will rebalance trade and boost domestic manufacturing, analysts at Bank of America say consumers are bearing 50% to 70% of the cost.
Tariffs Fuel Inflation
The tariffs are estimated to contribute 30 to 50 basis points to core inflation, with the PCE price index rising to 2.7% year-on-year in August. Despite trade deals with the UK and EU, rates on China and Canada remain high. Economists warn that the effective tariff rate could climb further, intensifying pressure on prices.
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