Anabelle Colaco
17 Jul 2025

WASHINGTON, D.C.: Inflation in the U.S. accelerated in June, signaling that the effects of President Donald Trump's sweeping tariffs are beginning to show up in consumer prices — a shift that economists had long warned could follow months of trade friction.

Consumer prices rose 2.7 percent in June compared to a year earlier, up from 2.4 percent in May, according to Labor Department data released this week. On a monthly basis, prices increased 0.3 percent, a faster pace than May's 0.1 percent gain.

The price jump, driven by categories like appliances, clothing, and furniture, presents a political challenge for Trump, who campaigned on promises to lower costs but has instead triggered broad tariffs that businesses say are raising them.

Excluding food and energy, core inflation climbed 2.9 percent annually and 0.2 percent month-to-month — numbers closely watched by the Federal Reserve. The data may discourage the Fed from lowering interest rates at its next meeting. Chair Jerome Powell has said the Fed is monitoring the inflationary impact of the tariffs before adjusting borrowing costs.

"You are starting to see scattered bits of the tariff inflation regime filter in," said Eric Winograd, chief economist at AllianceBernstein. He noted that the cost of long-lasting goods rose year-over-year for the first time in three years.

Gasoline rose one percent, grocery prices climbed 0.3 percent, and appliance prices surged for the third straight month. Toys, clothing, and sporting goods — all heavily imported — also got more expensive. Still, some prices fell, including for new and used vehicles, hotel rooms, and airfares.

Housing costs, a major driver of post-pandemic inflation, have slowed. Rent rose 3.8 percent from a year ago — the smallest increase since 2021.

Trump's tariffs — 10 percent on all imports and an additional 30 percent tariffs on Chinese goods — are now visibly affecting prices. He's also threatened 50 percent duties on Brazil, impacting items like coffee and orange juice. The cost of oranges rose 3.5 percent month-to-month and 3.4 percent year-over-year.

The White House dismissed concerns, citing falling auto prices despite a 25 percent auto tariff, and arguing that apparel prices remain lower than they were three months ago. "Consumer Prices LOW," Trump posted on Truth Social. "Bring down the Fed Rate, NOW!!!"

Democrats pushed back. "For those saying we have not seen the impact of Trump's tariff wars, look at today's data," said Senator Elizabeth Warren. "Americans continue to struggle with the costs of groceries and rent, and now prices of food and appliances are rising."

Businesses initially held back price increases, hoping the tariffs might be temporary. But many are now passing costs along. Walmart raised prices in June, and Mitsubishi lifted them by 2.1 percent, citing duties. Nike said it would adopt "surgical" price hikes.

At a news conference, Powell explained how tariffs pass through the economy: "There's the manufacturer, the exporter, the importer, the retailer, and the consumer… each one of those is going to be trying not to be the one to pay for the tariff… But together, they will all pay for it together."

Tariff-driven inflation also complicates Powell's position. While high inflation usually pushes the Fed to hike rates, the broader economic slowdown that tariffs could trigger would typically warrant cutting them — a tricky balancing act.

Trump has also called out Powell over cost overruns on Fed building renovations, now budgeted at US$2.5 billion. While the president legally can't fire the Fed chair over policy disagreements, the Supreme Court has signaled that Powell could be removed "for cause," such as mismanagement.

With new tariffs on EU goods set to take effect in August, the coming weeks could see further inflationary pressure — and sharpen the political debate over who bears the cost of Trump's trade strategy.