Prices go up to the United States, and it's no coincidence. Since Donald Trump's return to the White House, his aggressive trade policy has been working on the economy. The customs duties he imposed have repercussions on the household portfolio, raising inflation faster than expected.
In short
- Inflation increased sharply in June in the United States, reaching 2.7 %, under the effect of customs tariffs imposed by Donald Trump.
- The prices of goods affected by these taxes, such as furniture and household appliances, have climbed significantly.
- Faced with this situation, the federal reserve hesitates to lower rates, fearing an economic stagnation accompanied by an increase in prices.
Inflation gets carried away with customs tariffs
In the USA, inflation increased by 2.7 % in June over a year, its fastest rate since February. This increase is largely due to the customs duties imposed by Donald Trump. Furniture, household appliances and clothes have seen their prices climb. The products most affected by taxes have become more expensive for businesses, which have chosen to repercuss this cost on consumers.
The prices of gasoline have also increased, as well as those in food. The increases are not huge, but they add to each other. Result: households pay more without necessarily consuming more. And this is only the beginning. New taxes are planned in the coming weeks, which could further worsen the situation.
This return of inflation arrives in a delicate moment for the economy. Salaries do not increase at the same rate, and purchasing power is starting to drop. The trade war desired by Trump, supposed to protect the American economy, seems to weigh on the portfolio of Americans for the moment.
The Fed remains motionless in the face of tensions
Faced with this rising inflation, the Federal Reserve (the American Central Bank) prefers not to move. It keeps stable interest rates because the situation is difficult to read. On the one hand, the economy slows down slightly. On the other, prices are increasing. Lowering rates could stimulate growth, but it might further supply inflation.
Some officials would like to act quickly, others prefer to wait. In the meantime, the Fed keeps a cautious position. She first wants to better understand how Trump's economic measures will impact the long -term economy. Tax reductions, deregulation and customs taxes create many uncertainties.
President Trump continues to put pressure. It requires lower rates, going so far as to request a decrease of three points. According to him, inflation remains low. But recently published figures say the opposite. For the Fed, now is the time to take risks.
The risk of an economic blockage
What economists are now fear is stagflation. It is a rare phenomenon where prices increase while the economy slows down. This scenario complicates everything. The Fed can no longer lower rates to revive growth, as it would still raise prices.
Many companies find themselves in a delicate situation. They must choose between absorbing costs related to customs taxes, which reduces their profits, or increase their prices, which can scare customers. In any case, the economy slows down and prices go up: a circle difficult to break.
For the moment, certain prices are decreasing, such as those of cars or plane tickets. But these are exceptions. If trade tensions continue, other sectors may follow the same trend as household appliances or clothing.
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