Even as they stabilize, tariffs continue to drive up prices

The consumer price index, out earlier this week, confirmed that high energy prices are putting upward pressure on costs across the economy. No surprise there.

But there’s another factor continuing to push up inflation that shouldn’t be overlooked: tariffs.

Wolf Tooth Components is a bike parts manufacturer in Minnesota that makes a lot of its products out of aluminum. Co-owner Brendan Moore said after President Donald Trump announced his expanded steel and aluminum tariffs a year-and-a-half ago, one of Moore’s suppliers raised prices immediately.

“And then we had another one that said ‘Well, when we started paying this, you’re going to start seeing a price increase,’” he said.

As a result, Moore said some suppliers have slowly passed along those import taxes. And he said those price increases are happening more now that the president’s tariff policy seems a little more certain.

Because up until recently, it was unclear where tariffs would be long-term.

“Now it seems like the tariffs that are in now are pretty legally durable. So we can plan around that,” Moore said.

Prices are also rising in other tariff-sensitive categories, including autos, electronics, and other consumer goods, according to Kathy Bostjancic, chief economist at Nationwide.

“Household supplies. Personal care products. Jewelry, watches, clothing, apparel,” she said.

Bostjancic said the initial tariff shock could start to fade into next year.

But Jason Miller, a professor of supply chain management at Michigan State University, said tariffs are designed to protect domestic manufacturers. And that could give them a reason to keep raising prices going forward.

“They’re now in a better bargaining position with their customers to keep passing on higher costs, and/or to even just continue to raise their prices, because they’re facing less competition,” he said.

That’s why tariffs can keep putting pressure on inflation for years after they’re first imposed.