Tariff Inflation Is Everywhere…Except in Consumer Prices

April’s Consumer Price Index (CPI) came and went—with no sign of the Trump administration’s new tariffs pushing up inflation.

The April CPI report was supposed to be the moment when the new tariffs showed their teeth. After all, President Trump announced the 10 percent universal tariff—and reciprocal duties on over 60 countries—back on April 2. That was more than enough time for the price of imported goods to start climbing. Or so the theory went.

But the CPI says otherwise.

Headline inflation came in at just 0.2 percent for the month. Core inflation—excluding food and energy—also ticked up just 0.2 percent. Year-over-year, the all-items index slowed to 2.3 percent, the lowest reading since February 2021.

And what about the goods that were supposed to get hammered by tariffs?

The auto sector, which relies heavily on foreign parts and vehicles, also failed to follow the tariff-induced inflation narrative. New vehicle prices were flat in April. Used car prices actually fell 0.5 percent on the month. There was a notable increase in auto insurance, which jumped 0.6 percent in April and is up 6.4 percent year-over-year—but that’s a domestic cost issue, not a trade one.

If tariffs were going to spike prices quickly, this category should have been one of the first to blink. Instead, it barely moved.

What Did Go Up?

It’s also worth noting what did rise in the April CPI. Shelter prices climbed 0.3 percent, with both rent and owners’ equivalent of rent rising. Household furnishings and supplies rose 0.2 percent, likely on stronger housing demand. Recall that new home sales—a major source of demand for furniture—jumped 7.4 percent in March, and sales at furniture stores were up 7.7 percent. This is a story of domestic supply rather than anything to do with imports or tariffs.

There were also increases in computer and appliance prices. Tariffs may have played a role in raising these prices—although it is possible that tariff frontrunning pushed up demand. Retail sales in March, the most recent month for which we have data, rose 1.8 percent at electronics and appliance stores. And even if tariffs did raise prices on these categories, this appears to have been offset by declines elsewhere.

In other words, at most what we saw was some relative pricing shifts rather than a broad increase in the price level.

“Just Wait”—But for How Long?

Wall Street analysts have rushed to explain this away. Their consensus is that it could take months—sometimes six months or more—for tariffs to show up in retail prices. That sounds plausible. But it’s also exactly what the Federal Reserve says didn’t happen last time.

In a paper released last week, Fed economists looked at the 2018–2019 trade war and found that prices for consumer goods affected by tariffs rose within two months. The pass-through to consumer prices was described as “nearly full” and “rapid.” That means the April CPI should have shown some impact—especially for consumer-facing products. It didn’t.

Traders work on the floor of the New York Stock Exchange (NYSE) on May 13, 2025, in New York City. (Spencer Platt/Getty Images)

One reason could be inventory. Retailers and wholesalers likely stocked up on goods before the tariffs hit. That buffer could mute price pressures in the near term. What’s more, it could mean that the tariff pricing pressures never hit as hard as expected because the overstocking gives companies time to adjust.

Which brings us to the role of substitution. Tariffs don’t freeze markets—they re-route them. If Chinese apparel becomes expensive, retailers might switch to Vietnamese or Bangladeshi goods. If auto parts from one country get hit, manufacturers may draw from Mexico, Canada, or the United States. Over time, supply chains bend around tariff walls. The long-term effect might actually be lower import reliance and greater resilience.

If prices remain subdued in May and June, it will suggest that the 2025 tariffs are being absorbed, avoided, or offset. That would be a major surprise to economists and a vindication for those who argue that tariff policy can be strategic without being inflationary.

But if prices jump next month, you can bet the same analysts who told us it would take half a year will suddenly claim the tariffs are to blame.

This was the third month in a row in which analysts overestimated inflation, a sign that they are assuming too much tariff impact. It is all very reminiscent of the tariff panic in the first Trump administration, when analysts and legacy media outlets claimed that higher import duties would squeeze consumers—only to have to explain away why this did not happen month after month.

They were wrong then. They might be wrong again now.