Inflation decreased in March: how tariffs could impact prices this year
Prices fell on average in March, says the BLS. What the March report tells us about how tariffs will impact prices in 2025.
Markets around the globe rebounded yesterday and this morning after President Donald Trump rolled back the most severe tariffs on key trading partners that had taken effect early Wednesday. With the exception of China, the majority of the U.S. trading partners will face a 10 percent tariff on imports, which will be borne by U.S. importers. In contrast, those importing Chinese goods will encounter a hefty 125 percent tariff, a measure the White House justifies as a response to retaliatory tariffs and export controls enforced by Beijing.
On Thursday, the Bureau of Labor Statistics released the Consumer Price Index report for March, which offers initial insights into the effects of the first tariffs on prices.
Prior to the announcement of reciprocal tariffs, the White House had implemented a 20 percent tariff on goods from China, as well as a 25 percent duty on steel and aluminum. Additionally, a 25 percent tariff was imposed on Canadian and Mexican imports not covered by the trade agreement reached between the three North American countries during the first Trump administration.
Consumer prices fell on average in March
According to the BLS, inflation, as represented by the CPI, inflation decreased by 0.1, following a 0.2 percent rise in February and a 0.5 percent bump in January. So far this year, prices have increased by an average of 0.6 percent, led primarily by housing and energy resources.
The decrease seen in March was attributed by the BLS to the fall in the price of gasoline. However, there were some increases in key sectors.
Housing prices continued to rise in March, with rents ticking up 0.2 percent, for a year-over-year rise of four percent. Apparel rose 0.4 percent, and could rise as tariffs are imposed on textile heavy economies, including China and Vietnam.
The threat of tariffs on food markets dependent on imports
Grocery prices rose 0.5 percent, with meat, dairy, products, and eggs all rising above 1 percent. Though the White House has touted a fall in the price of eggs, the BLS tracked a close to 6 percent increase paid by consumers. H
Though much of the food consumed in the US is produced domestically, there are some beloved products that rely heavily on imports to reach US supermarkets. Coffee and bananas are two examples. Last month, the BLS found that coffee prices rose by 0.9 percent, and banana prices rose by 1.1 percent. These increases could indicate that tariffs are already being priced into these goods.
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