Given the huge surge in imports and inventories in March, most of the imported goods sold in April or used in production were likely at pre-tariff costs and hence would not cause price increases. Now that most tariffs are “paused” at lower levels, ongoing imports will be at slightly higher prices. But over all you are right, the cry wolf scenario on everything is getting tiresome.
Broadly speaking, if there is a surge in demand for a good--even if that surge is merely an acceleration of aggregate demand into the current period--there will be a corresponding upward pressure on prices.
The spike in durable goods prices is therefore potentially attributable to the acceleration of purchases made in an effort to avoid tariffs. In that scenario, next month and the month after, we should see deflation in durable goods prices, as the acceleration of demand into April will produce a drop in demand (and therefore prices) across subsequent months.
Pricing is the result of a number of influences and forces, of which tariffs is only one. The narratives that tariffs would invariably produce drastic inflation have been guilty of a dangerous and even deceptive oversimplification.
Given the huge surge in imports and inventories in March, most of the imported goods sold in April or used in production were likely at pre-tariff costs and hence would not cause price increases. Now that most tariffs are “paused” at lower levels, ongoing imports will be at slightly higher prices. But over all you are right, the cry wolf scenario on everything is getting tiresome.
Broadly speaking, if there is a surge in demand for a good--even if that surge is merely an acceleration of aggregate demand into the current period--there will be a corresponding upward pressure on prices.
The spike in durable goods prices is therefore potentially attributable to the acceleration of purchases made in an effort to avoid tariffs. In that scenario, next month and the month after, we should see deflation in durable goods prices, as the acceleration of demand into April will produce a drop in demand (and therefore prices) across subsequent months.
Pricing is the result of a number of influences and forces, of which tariffs is only one. The narratives that tariffs would invariably produce drastic inflation have been guilty of a dangerous and even deceptive oversimplification.
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