Imports seeing large tariff changes aren't a particularly large part of the CPI basket, and domestic substitutes exist. Expected responses from US manufacturers putting their own prices up are lagged, and tempered by some of the consumer response being simply buying less stuff.
How can it be possible that consumers are paying 96% of tariffs that range from 25-100%. Yet inflation has only risen by 0.5 points? Consumption would have to be less than a fifth of what it was a year ago. And why haven’t there been such equally drastic price changes on shelves if whats functionally the entire cost is being passed to consumer?
Ask your question the other way round? How did Chinese companies absorb the cost of the 125% tariff, were they selling it at less than half price or giving it away for free?
Answer is they didn't: if the US buyer wanted it that badly they picked up the tab or otherwise they waited for the tariff to come down to 10% or went without. Also, very few goods in the US (probably none in the CPI representative basket of goods) are bought directly from Chinese vendors, they're bought from US retailers. Those US companies can eat the tariff cost if the exporter won't and they can't sell at a higher price. That obviously affects their margins, their sales and their hiring.
Yes exactly, if the exporter is not absorbing the cost, and the consumer is not absorbing the cost (for the most part), the importing company must be absorbing the bulk of the cost.
The Fed predicted it added 0.5 points to what inflation could have fallen to with the expected effects only partially visible. https://www.stlouisfed.org/on-the-economy/2025/oct/how-tarif...