Inflation almost disappeared. Price hikes in March were the lowest in four years and wholesale prices actually declined. It should be a moment of relief as a prolonged fight against inflation finally seems victorious.
But nobody is celebrating because President Trump is refueling inflation with tariffs that will raise the cost of thousands of imported goods. Trump’s trade war morphed this week from a confrontation with most of the world to a more focused showdown with China. With stock and bond markets quaking, Trump on April 9 postponed most of the “reciprocal” tariffs he imposed just a week earlier on dozens of countries. At the same time, he raised tariffs on Chinese imports to exorbitant levels that will shock consumers if they stay in place for long.
The state of Trump’s trade war now entails 145% tariffs on most Chinese goods, along with 25% tariffs on imported cars, car parts, steel, and aluminum from everywhere else. There’s also a new “baseline” tariff of 10% on most imports not covered by those other tariffs. China has retaliated with a 125% tariffs on imports from the United States and other limits on American goods. These war plans change daily, and for now, they mostly escalate.
In the coming weeks, the Trump tariffs will become less abstract and far more tangible as soaring customs duties paid by American importers get passed along to consumers through higher prices. The Yale Budget Lab estimated the likely price changes Americans will face in 65 categories covering most things Americans buy. The biggest price hikes will come in categories where US markets are most dependent on Chinese suppliers since the China tariffs are so steep.
The chart below shows estimated price hikes in 15 product categories likely to be most affected by the Trump tariffs. Those price hikes are likely across all products, not just imported ones, because rising import costs allow producers of competing domestic products to raise their prices too. The chart also shows price changes in the same categories from June 2021 to June 2022, which represented peak inflation when Joe Biden was president.
Some of these changes will bring eye-popping pain to shoppers. The Trump tariffs will raise the cost of leather products such as belts and handbags by 86%, according to the Yale forecast. Clothing prices will rise by 64%. Small appliances such as toasters, up 46%. Tools and fixtures, up 23%. Large appliances, up 18%.
Inflation won’t go all the way back to the 9% peak it hit under Biden. The Yale forecast is for inflation in 2025 to be 2.9 percentage points higher than it would have been without the tariffs. That would push the overall inflation rate for 2024 up from 2.4% now to somewhere between 5% and 6%.
The Biden inflation that ran from 2021 to 2024 obviously hit consumers hard. Grocery prices rose by double digits for much of 2022. Rent hikes consistently outpaced wage gains. Gasoline prices spiked after Russia’s 2022 invasion of Ukraine, hitting an average of $5 per gallon for the first time ever that year.
U.S. President Donald Trump attends a cabinet meeting at the White House in Washington, D.C., U.S., April 10, 2025. REUTERS/Nathan Howard ·REUTERS / Reuters
But there were areas of subdued inflation under Biden, which kept the overall inflation burden from being even worse. Cheap products from China helped ease the burden then. Under Trump, however, those products will see some of the biggest price hikes.
Clothing prices, for instance, were one thing shoppers barely had to worry about under Biden. During the worst spate of Bidenflation, they rose just 5%. But with cheap Chinese-made clothing now subject to a 145% tariff, Americans are likely to see astonishing price hikes averaging 64%.
The price of electronics actually fell by 8% during the worst stretch of Bidenflation. That party is over. Under Trump, the cost of smartphones, laptops, and other gizmos is likely to rise by 11%.
Car prices soared under Biden, in large part due to a COVID-era shortage of semiconductors that sharply curtailed new car inventories. The shortage of semis is over, and car prices have flatlined. But Trump’s tariffs will push car prices up again, by 12%, per the Yale analysis. The rising cost of cars and parts is a major contributor to soaring insurance rates, since repairs and replacement vehicles cost more. So insurance will rise right along with car prices.
If the Trump tariffs remain in place, businesses and consumers will adjust to some extent. US importers will find new suppliers subject to lower tariffs. Shoppers will buy less or substitute cheaper goods for costlier ones. That will lessen the ultimate hit to American wallets. But Yale thinks that after such adjustments, long-range inflation will still be 1.7 percentage points higher, with clothing costs, as one example, settling 27% higher than pre-tariff levels.
Would Trump really punish American shoppers this drastically? When he began his second term, many analysts expected Trump to threaten draconian tariffs but mostly use that as leverage to make trade deals that kept the basic trade infrastructure more or less in place. That view has changed now that Trump has imposed far higher tariffs than almost anybody expected and offset concessions in one area with unprecedented aggression in another.
Trump may not care what anybody pays for a purse or a pair of shoes. You have probably have enough of that stuff in your closet, anyway.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
