But tariffs may start showing up as inflation in the second half of 2025

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Many U.S. companies, including GM, Walmart, and Home Depot, are currently absorbing tariff costs, sacrificing profits to shield consumers from price hikes.
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Despite this buffer, rising tariffs on imports from China, Vietnam, and the EU are driving up prices on electronics, clothing, and household goods.
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Economists warn that by late 2025, these tariff-related pressures may push more costs onto consumers, potentially fueling a fresh wave of inflation.
The White House has announced that the U.S. and Japan have agreed to a trade deal, cutting tariffs on Japanese goods from 25% to 15%. In return, Japan will provide $550 billion in loans and investments to the U.S.
Thats good news for U.S. companies that import products from Japan, who so far are absorbing much of the tariff costs, reducing their profit margins. For example, Junes Consumer Price Index showed new car prices actually dipped during the month. General Motors is one automaker eating much of the tariffs.
GM reports tariffs on imported cars and auto parts took a $1.1 billion bite out of its second quarter profit, reducing net income by 35%. The question is, how long is that sustainable?
While tariffs are typically paid by importers, the cascading costs often end up with end users. In June and July, major retailers reported price increases of 5% to 15% on a wide range of products, attributing the hikes to new duties imposed on goods from China, Vietnam, and the European Union.
Where tariffs are boosting prices
Consumers are beginning to see the effects of tariffs when they shop for electronics. A 15% tariff on Chinese-manufactured components is pushing up the price of laptops, tablets, and gaming consoles.
Textile and clothing imports from Southeast Asia now face duties up to 18%, raising costs on everyday items like jeans, shirts, and activewear at retailers where those costs are being passed on to consumers. Tariffs on steel and aluminum have increased costs for appliances and furniture, particularly those made with imported parts.
One reason the inflationary effects of tariffs have not been greater is some retailers have so far, at least not passed the added cost to retail prices. Walmart has acknowledged rising input costs due to tariffs but has largely absorbed these expenses to avoid pushing the burden onto shoppers. Company statements confirm that its capacity to shield customers, while limited, has been substantial so far.
In June, Home Depot said it would absorb all tariff costs as long as it could. And as noted above, GM has opted to eat the extra costs to preserve its market share. Some retail economists say American retailers may be forced to pivot in the second half of 2025 and add at least some of the cost of tariffs to the price consumers pay.
Posted: 2025-07-23 12:27:53