Six Months of Trump Tariffs: U.S. Economic Impact More a 'Tremor' Than an 'Earthquake'

WSJ: Concerns Persist That Tariffs Will Fuel Inflation Over Time

The Wall Street Journal (WSJ) reported on August 6 (local time) that, despite warnings from some quarters that tariffs imposed by U.S. President Donald Trump on major trading partners would set back the U.S. economy, the effects observed so far have been minimal, six months after the tariffs took effect.

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President Trump launched a "tariff war" in February, imposing a 25% tariff on Canada and Mexico and a 10% tariff on China, citing reasons such as their lackluster response to the inflow of the synthetic drug fentanyl into the United States. According to estimates from the Yale Institute for Budget Studies, as of August, the effective U.S. tariff rate has risen to 18.3%, the highest level since 1934.

WSJ noted, "Six months after the United States imposed tariffs, the economy has not collapsed. Prices have not surged, and supermarket shelves have not been emptied." While some economists had warned that tariffs would set back the U.S. economy and trigger a sharp rise in prices, the report concluded that, although the economy may have experienced some negative effects, there has been no major shock.

Tariff revenues have increased significantly. According to U.S. Treasury Department statistics, U.S. tariff revenue in June reached $27.2 billion, nearly four times higher than the same period a year earlier. The trade deficit also narrowed to $60.2 billion, the lowest level since September 2023. Up to this point, it can be said that, as President Trump has claimed, tariffs have had a positive effect on the economy by increasing tax revenue and reducing the trade deficit.

However, some point out that this increase in tariff revenue is temporary and that it is unlikely to fundamentally change the trend of the U.S. trade deficit. Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics (PIIE), explained, "If tariffs reduce U.S. imports, exports may also decrease, making it difficult to significantly change the trade deficit. When imports decline, U.S. manufacturers must produce more of the goods previously sourced from abroad. As resources such as labor and factories are redirected to domestic production, the capacity to produce goods for export is ultimately reduced."

There are also persistent concerns that inflationary pressures from tariffs will intensify over time. U.S. companies have so far absorbed the burden of tariffs without raising prices, fearing the loss of customers, but ultimately, companies will have no choice but to pass these costs on to consumers.

Alberto Cavallo, a professor at Harvard Business School, said that his survey of major retailers showed that, following the tariff hikes, prices of imported goods such as household products, furniture, and electronics rose by nearly 3%. He noted, "Because importers are absorbing the burden, the price increases so far have not been very large," but also predicted that if tariffs on major trading partners remain between 10% and 15%, product prices could rise by up to 4% by the end of the year.

This content was produced with the assistance of AI translation services.