Tariffs imposed on goods like washing machines, dryers, and dishwashers have ultimately been shouldered by consumers, with the full impact on thier finances not appearing for approximately two years. This suggests that consumers absorbed about 90% of the cost increase stemming from these tariffs.
The debate within the Federal Reserve, and more broadly, centers on whether tariff-induced inflation is a one-time event or a persistent issue. Even if considered a one-time shock, its effects coudl linger for an extended period.
Currently, the tariff rate impacting revenues is approximately 8.85%. However, this figure is expected to rise as negotiations with countries like Mexico and China continue, and as the USMCA agreement undergoes renegotiation next year. This dynamic suggests that the tariff rate will remain a variable and moving target.
The assertion that foreign exporters are absorbing these costs through invoice pricing is being challenged by the observed rise in import prices.If exporters were indeed absorbing the costs, import prices would be expected to fall significantly, which is not the case. This indicates that the burden of these tariffs is highly likely to be borne by importers, retailers, or consumers further down the supply chain.