WALNUT CREEK / LONDON (IT BOLTWISE) – The impact of tariffs on consumer goods will be more noticeable this year’s Christmas season. While inflation remains stable in the US, prices for consumers could rise as a result of tariffs. Experts expect companies to pass the costs on to customers, which could lead to an increase in spending.
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The upcoming holiday season could become more expensive for U.S. consumers as the impact of tariffs imposed by President Donald Trump on a variety of products and countries becomes more noticeable. Those tariffs, in effect since April, have so far had only a muted impact on inflation, which has ranged between 2.5% and 3%.
However, economists expect the tariffs to keep inflation measures at higher levels than they would be without them. According to Aditya Bhave, an economist at Bank of America, there is no doubt that tariffs have pushed up consumer prices. Companies have so far tried to mitigate the impact by building up inventories and reducing their profit margins.
Bank of America estimates that the tariffs contribute about half a percentage point to the core PCE inflation rate, which the Federal Reserve uses to assess inflation. Without the tariffs, inflation would be around 2.4% in September, rather than the estimated 2.9%. These differences matter for the Fed, which is trying to keep core inflation at 2%.
For consumers, this means higher prices for everyday items like coffee, furniture and clothing. These price increases, although they represent only a small portion of price indices, can influence perceptions of inflation and trigger a self-reinforcing cycle that causes prices to continue rising. Analysts at TD Cowen note that prices for seasonal goods such as artificial Christmas trees, which are almost exclusively imported from China, could be particularly affected.
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