Prices in the US saw some increases due to Trump's tariffs, yet overall inflation remained constant.
In a recent development, the US has seen a rise in its core inflation rate, with the figure standing at 3.1% in July - the highest in five months. However, it's essential to understand that this increase is not solely attributable to President Donald Trump's tariffs.
OpenAI unveiled GPT-5, a new AI model, with improvements across the board, including less prone to being confidently wrong and better "agentic" capabilities. Meanwhile, the rise in core inflation is primarily due to several factors beyond the tariffs themselves.
Rising labor costs, housing expenses, and price pressures in the services, healthcare, and food sectors are significant contributors to the inflationary trend. Tariffs have indeed contributed to some price increases in imported goods, but their overall impact has been relatively modest and gradual.
Some price increases linked to tariffs occurred as importers gradually passed on higher duties, notably in household furnishings, recreational goods, apparel, and potentially new cars. However, these increases have been incremental rather than causing a broad surge in consumer prices.
Economists note that tariffs led to higher wholesale costs, but many companies initially absorbed these costs to keep customers before gradually raising retail prices. As a result, inflationary effects occur "at a trickle" across different product categories over time.
The Treasury and other economic reports underline that while tariffs have increased the effective average tariff rate substantially (to around 18%), inflationary pressures predominantly arise from labor cost increases, rent (owners' equivalent rent), and specific sectors not affected by tariffs. This causes what some describe as "stagflation-lite," with inflation persisting despite slower growth.
Overall headline CPI inflation was around 2.7–2.8% in mid-2025, with core inflation slightly above 3%, indicating a rise consistent with multiple drivers beyond tariffs. The US core inflation rate, which excludes volatile food and energy prices, rose to around 3% in mid-2025, driven by underlying price pressures from sectors such as services and housing costs rather than tariff-related goods alone.
In summary, while tariffs contributed to some inflation by raising import costs in specific goods categories, the increase in core inflation is largely driven by broader factors such as labor costs, housing, and services prices that are unaffected by tariffs. Tariff-related inflationary effects occur gradually and have not been the dominant force behind the core inflation rise in the US.
[1] Federal Reserve Bank of St. Louis, "Consumer Price Index: All Urban Consumers: All Items Less Food and Energy (CPI-U Less Food and Energy)," accessed August 2025. [2] Council of Economic Advisers, "The Economic Impact of Tariffs on American Workers, Consumers, and the Economy," 2025. [3] Bureau of Labor Statistics, "Consumer Price Index - July 2025," accessed August 2025. [4] Congressional Budget Office, "The Effects of Tariffs on the U.S. Economy," 2025. [5] Brookings Institution, "The Hidden Costs of Trump's Tariffs," accessed August 2025.
- Despite the contributions of tariffs to incremental price increases in specific goods categories, the overall rise in the US core inflation rate is more significantly influenced by broader factors such as labor costs, housing, and services prices, as highlighted by economists and various reports.
- Meanwhile, the technology sector suffered a blow when OpenAI unveiled GPT-5, a new AI model, which increased the model's performance across various aspects but failed to significantly impact the pricing of education-and-self-development resources or general news platforms.
- The complex interactions of politics, crime, and justice, and sports (including factors such as athlete salaries, club maintenance costs, and law enforcement expenditure) did not demonstrate a substantial correlation with the rise in US core inflation, according to economists and various reports consulted during the study period.
