U.S. Wholesale Inflation Falls, Trump Tariffs Raise Concerns

11 Apr at 11:33 am

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U.S. Wholesale Inflation Falls, Trump Tariffs Raise Concerns/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. wholesale inflation fell in March, offering a fresh sign that price pressures are easing across the economy. But President Trump’s steep tariffs on Chinese and global imports could reverse gains in the months ahead. Economists warn that trade-related cost hikes could soon pass through to consumers.

Customers shop televisions at a retail store in Glenview, Ill., Thursday, April 3, 2025. (AP Photo/Nam Y. Huh)

Wholesale Price Dip, Tariff Worries: Quick Looks

Producer Price Index (PPI) dropped 0.4% in March, the first monthly decline since October 2023.
Year-over-year wholesale prices rose 2.7%, better than February’s 3.2% and below forecasts.
Gas prices fell 11.1%, while egg prices plummeted 21.3% after a bird flu-driven spike.
Core PPI, excluding food and energy, dipped 0.1%, the first decline since July 2024.
Year-over-year core prices rose 3.3%, lower than economists expected.
The news followed strong consumer inflation data, with the CPI up just 2.4% in March — the lowest since September 2023.
Trump’s 145% tariff on Chinese goods and 10% global import tax could reverse inflation gains.
Economists warn importers may pass higher costs to consumers, pushing inflation back up.

U.S. Wholesale Inflation Falls, Trump Tariffs Raise Concerns

Deep Look

WASHINGTON — U.S. wholesale inflation ticked down in March, offering a second straight signal that price pressures may finally be stabilizing after years of volatility. But economists and policymakers alike remain uneasy as President Donald Trump’s aggressive trade policies threaten to reignite cost increases in the coming months.

The Labor Department reported Friday that its Producer Price Index (PPI) — a key gauge of prices at the wholesale level — fell 0.4% from February, marking the first monthly drop in nearly six months. The annual increase also cooled, rising just 2.7%, down from 3.2% in February and well below the 3.3% forecast by economists.

The decline was driven largely by a sharp 11.1% drop in gasoline prices, and a 21.3% plunge in egg prices, which had surged earlier due to avian flu outbreaks affecting poultry farms.

Core Inflation Also Slows

Excluding the volatile categories of food and energy, core wholesale prices slipped 0.1% from the previous month, their first decline since July 2024. Year-over-year, core prices rose 3.3%, again lower than expected.

The report followed encouraging news Thursday that consumer prices also moderated, with the Consumer Price Index (CPI) showing a 2.4% year-over-year rise — the smallest annual gain since September 2023. Core CPI, which strips out food and energy, notched its slowest pace in nearly four years.

Tariffs Cloud the Forecast

Despite the optimism, economists warn that the inflation outlook remains murky, largely due to Trump’s escalating trade war with China and sweeping import tariffs affecting dozens of countries.

Trump recently raised tariffs on Chinese imports to 145%, a staggering increase aimed at pressuring Beijing over intellectual property and fentanyl exports. He also imposed a 10% universal tariff on most other foreign goods — a measure that could climb higher if no new trade agreements are reached in the next 90 days.

“The danger is that the wholesale inflation improvement we’re seeing now may be short-lived,” said Diane Swonk, chief economist at KPMG. “Tariffs act like a tax on business inputs, and that cost will eventually reach consumers.”

Consumer Impact Looms

Tariffs increase prices for imported goods ranging from electronics and machinery to clothing and food, pushing up production costs for U.S. companies that rely on global supply chains. Over time, those cost increases can get passed on to consumers through higher retail prices, reversing the recent easing in inflation.

While some economists support tariffs as a tool for leveling global trade, others say the speed and scale of Trump’s new duties risk destabilizing markets and slowing economic growth, just as the Federal Reserve tries to navigate a “soft landing.”

“We’re in a delicate place,” said University of Michigan economist Betsey Stevenson. “Tariffs could push up prices just as consumers are finally catching a break.”