Many economists predicted that President Donald Trump’s regime of tariffs on virtually all Chinese imports would lead to price increases on many American goods, but the latest economic data suggests the opposite.
Despite record low unemployment, the Labor Department’s Consumer Price Index (CPI) only rose 0.2 percent in December, which was less than 0.3 percent the month before and 0.4 percent in October.
Economists had forecast a 0.3 percent increase in December.
Core CPI, which excludes the volatile categories of food and energy, rose by just 0.1 percent.
According to government data, prices for many high-demand consumer items are falling.
Televisions are down in price nearly 20 percent compared to a year ago, while apparel prices have also dropped about 1.2 percent. Women’s clothing prices have fallen an average of 2.2. percent, while major appliances are down 7 percent.
Fresh fruit and vegetable prices are also down about 1.8 percent.
The price of cars and trucks are up just one-tenth of a percentage point. Even drug price inflation is low, with prices rising just 3 percent.
In May 2019, The Wall Street Journal reported that President Trump’s tariffs on hundreds of billions of dollars’ worth of Chinese imports “could amount to as much as $30 billion of annual revenues for the government—and additional costs for U.S. consumers.”
Though the report suggested that any prices increases would be modest, it appears as though in large part the trade battle with China is having little impact on American consumer prices.
Trump administration officials announced a “Phase One” trade deal with China earlier this month that the president is expected to sign in the coming days.