Economic Advisers Council Reports Import Prices Falling, Undercutting Tariff-Driven Inflation Fears

(The Epoch Times)—A new report from the White House Council of Economic Advisers found that prices for imported goods have dropped in the first five months of the year, even though overall goods prices have risen in the same period, challenging the notion that President Donald Trump’s tariff policies are fueling higher inflation.

“Imported goods are actually getting cheaper,” Steve Miran, chair of the Council of Economic Advisers, said in a July 8 interview with Fox News about the report’s findings.

The report analyzed inflation trends using both the Personal Consumption Expenditures (PCE) Price Index, which is closely tracked by the Federal Reserve; and the Consumer Price Index (CPI), the measure more familiar to most Americans.

According to the report, import prices—those directly affected by tariffs—dropped 0.1 percent from December 2024 through May 2025 based on PCE data, while overall goods prices rose 0.4 percent over the same period. CPI data showed a similar pattern, with prices for imported goods falling 0.8 percent even as overall goods prices remained flat.

“The prices of imported goods have not only fallen this year, but also declined faster than overall goods prices since February,” the report states. “These findings contradict claims that tariffs or tariff-fears would lead to an acceleration of inflation.”

The report arrives amid ongoing debate over whether Trump’s tariff measures might eventually push inflation higher. So far, the administration has imposed a baseline 10 percent tariff on nearly all countries, while certain nations, such as China, face higher rates.

Additional “reciprocal” tariffs have been announced but these have been suspended until Aug. 1 to allow negotiations for broader trade agreements that could lower or eliminate the tariffs. Many analysts expect the largest price impacts to emerge if those reciprocal tariffs take effect in August.

In April, Treasury Secretary Scott Bessent noted that a rough rule-of-thumb is that every 10 percent increase in tariffs typically leads to about a 2 percent increase in consumer prices. But he emphasized that this relationship isn’t always precise, citing Trump’s first term, when roughly 20 percent tariffs on China raised U.S. consumer prices by only about 0.7 percent, according to one study.

In a recent interview on ABC News, Miran said he expects similarly modest inflation effects from Trump’s current tariff policies.

“I think that there’s been a lot of doom mongering, a lot of scare mongering,” Miran said, addressing concerns from some economists that tariffs could trigger a surge in inflation. Drawing on the experience from Trump’s first term, he added that there was “no meaningful economic inflation” from earlier tariff measures, and he expects a repeat this time around.

“Thus far again, this time, we’ve had a repeat of the same performance, whereby lots of folks predicted that it would end the world, there would be some sort of disastrous outcome,” Miran said. “And once again, tariff revenue is pouring in. There’s no sign of any economically significant inflation whatsoever, and job creation remains healthy.”

Indeed, the latest jobs report showed the labor market remained robust in June, with the economy adding a stronger-than-expected 147,000 jobs. The unemployment rate edged down to 4.1 percent. In another sign of labor market strength, job openings in May soared to a higher-than-expected 7.7 million, rising by 374,000 from the prior month and defying pessimistic predictions for a decline.

Inflation has also stayed relatively subdued. The latest PCE data showed prices rising just 0.1 percent from May to June, bringing the annualized headline inflation rate to 2.3 percent, close to the Federal Reserve’s 2 percent target. The CPI, meanwhile, showed annual inflation at 2.4 percent in May, the latest available data. The Fed tends to place more weight on the PCE index because it’s updated more frequently and covers a broader range of expenditures.

Federal Reserve Chair Jerome Powell has indicated he wants to see further inflation data through July to ensure price pressures are cooling before considering interest rate cuts.

Trump, however, has been pressing for immediate rate reductions, arguing that Powell and other Fed officials are unnecessarily restraining economic growth by keeping rates elevated.

“Jerome ‘Too Late’ Powell, and his entire Board, should be ashamed of themselves for allowing this to happen to the United States,” Trump said in a recent post on Truth Social. “They have one of the easiest, yet most prestigious, jobs in America, and they have failed—And continue to do so.”

Beyond potentially spurring economic growth, lower rates would also help reduce the government’s borrowing costs. The U.S. Treasury pays interest to investors holding government debt, and those payments have ballooned in recent years.

In fiscal year 2024, the government spent $882 billion on net interest payments—almost triple the amount from 2020, according to Treasury data. In the first eight months of fiscal 2025, interest payments have totaled $665 billion, putting the United States on track for the highest annual interest bill in its history.

Meanwhile, although Trump’s tariffs haven’t driven up inflation, they have generated significant revenue. Since Trump’s return to office in January, U.S. Customs and Border Protection has collected more than $106 billion in customs revenue, including $81.5 billion directly attributed to the new tariff measures.

During a cabinet meeting on July 8, Trump said that once the reciprocal tariffs take effect in August, “big money” would begin flowing into Treasury coffers, helping to ease the government’s funding challenges.