Tracking the impact of US tariffs on spending and prices

Our bottom-up framework of how imports feed into consumer spending identifies where we
expect the largest tariff impacts. Our baseline is that prices in certain categories could increase
by as much as 4%, significantly more than the anticipated 0.5% rise in the overall price level.

What you will learn:

• We traced how tariffed imports feed into overall consumer spending directly and across the supply chain using input-output tables. Based on our assumptions about tariffed countries and products, we estimate a potential price increase across 74 goods and services.
• Household appliances, various homeware categories, and sports and recreation equipment are the most affected by current tariffs. We built a basket of these PCE categories to monitor their impact on real spending and inflation.
• Our bottom-up estimates help validate the results from our top-down model-driven analysis. It also provides a framework for teasing out the evolving impact of tariffs on the economy and prices at higher frequencies.

For more insights on the 2024 US Presidential Election, click here.