How have tariffs affected the prices of goods sold to American consumers?

Tariffs are, in effect, taxes imposed on goods the U.S. imports from other nations. As such, they can affect prices depending on how much of the tariffs are passed through to consumers. But how much have those prices changed?

A new paper by the Harvard Pricing Lab's Alberto Cavallo, Paola Llamas, and Franco Vazquez explores how President Trump's tariffs have affected the prices of goods being sold in the U.S. using daily pricing data from PriceStats, which was formerly known as the Billion Prices Project.

The following chart, which has been updated with an extra month's worth of data beyond what the authors presented in their paper and which we've annotated, shows how the prices of three categories of goods have changed in the period from 1 October 2024 through 12 October 2025.

Imported goods make up one category, but Cavallo, Llamas, and Vazquez divide domestic goods into two categories: ones that are also affected by tariffs and ones that are not. They describe how they determined what goods fall into each of these three categories:

To better understand the drivers of price changes among domestic goods, we combine information on countries of origin and HS code classifications to identify which products are more affected by tariffs. Barring a few exceptions, all imported goods in our sample are subject to at least the baseline 10 percent tariff. Domestic goods, however, can be differentiated by their degree of indirect exposure.

We classify a domestic good as affected if it either belongs to an HS category directly targeted by the tariffs or falls within a three-digit COICOP category in which more than half of the products are imported. The first criterion captures goods such as those made of steel and aluminum, whose imported counterparts faced explicit tariff rates at the HS level. The second identifies domestic goods in import-intensive consumption categories, where competition with imports affected by country-level tariffs is expected to be strongest.

With that definition set, here's how they describe the various phases of the tariffs covered in the period covered by the data in this chart:

Before the tariffs took effect, two patterns are evident. First, prices for imported goods fell temporarily from late November to early January, reflecting typical holiday discounts in categories such as electronics and household items. Second, both domestic and imported goods exhibited a mild deflationary trend during the initial months. This reflects the matched-model index structure and product composition: many goods, particularly electronics, are introduced at high prices and discounted gradually over time. Because the index does not attempt to link new and old models of similar goods, or apply quality adjustments, these markdowns appear as steady price declines.

We think this is the weakest part of their analysis. Because they focused on President Trump's tariffs, they did not acknowledge the role of the Biden-Harris administration's tariffs and anti-free trade measures that were contributing factors to these trends in this period.

In particular, what they really missed was the actions of importers to frontload (or frontrun) the new tariffs they faced in 2024 and 2025. Here, producers and importers cranked up production and shipping of goods to beat the clock on when tariffs and other trade restrictions would go into effect. These surges in supply, which did not coincide with a matching surge in end-consumer demand, contributed to the decline in consumer prices of imported goods during this period.

The largest decline in import prices took place after the 2024 elections, for which the reelection of President Trump would ensure new tariffs were on the horizon for importers, giving them an additional incentive to resume their frontloading practices. The authors attribute this plunge in import prices to "typical holiday discounts" in this period, but this assertion is not well supported by the data they've made available - we would need to see this assertion supported and quantified by a similar pattern during these months in previous years.

The rest of their analysis is stronger as it fits their primary focus on President Trump's tariff policies:

Four salient patterns emerge from Figure 2, summarizing the main features of the price adjustment. First, retail prices responded almost immediately to major tariff announcements, often within days. After March 4, imported goods prices rose by about 2 percent, while domestic prices increased by roughly half as much. Following the “Liberation Day” announcement on April 2, which introduced a 10 percent baseline tariff on all imports, imported goods continued to rise, whereas domestic prices stabilized. The tariff pause on Chinese goods announced on May 12 led to a quick temporary drop in all prices, while the “letters” escalation in July led to renewed pressures. These rapid reactions suggest that retailers were forward-looking, attentive to tariff news, and adjusted prices in anticipation of expected, rather than realized, import costs.

Second, most of the pass-through is gradual rather than discrete. After the tariffs are implemented, prices followed a new, persistent upward trajectory, marking a clear break from the pre-tariff trends. This suggests that tariffs affected retail prices mostly through a sustained upward pressure rather than a single, discrete jump.

Third, domestic goods were also affected, exhibiting a milder but sustained increase in prices since March. This highlights the broader reach of tariff policies beyond directly targeted imports. Several mechanisms may account for this pattern. Producers and sellers of domestic goods may raise prices in response to reduced competition from foreign goods, particularly in categories where domestic and imported products are close substitutes (Flaaen, Hortacsu and Tintelnot (2020)). Many U.S.-made products rely on imported inputs—such as components, packaging, or raw materials—from tariffed countries (Amiti, Redding and Weinstein (2019)). Additional factors could include efforts to distribute cost increases across product lines, maintain relative price structures, or expectations that higher inflation could increase future costs....

Finally, the magnitude of the price increases appears to be modest relative to some of the tariff announcements. Between March and September 2025, imported goods rose by about 4 percent and domestic goods by 2 percent. Relative to pre-tariff trends, these increases amount to 5.4 and 3 percent, respectively.

Their analysis covers the period through 12 September 2025. Since their paper was released, they've provided additional pricing data for each series through 12 October 2025. That data shows increases in prices for both imported and non-tariff-affected domestic goods, whose price indices are respectively some 2.2% and 1.4% above their 1 October 2024 level. Domestic goods affected by tariffs however have recently seen a marked decline in their prices, and are now just 0.2% above their 1 October 2025 level.

The increase in non-tariff affected domestic goods and decrease in tariff-affected domestic goods provides a good indication that the effect of tariffs on prices is more complex than might be expected. That's because in addition to being complex in how producers and suppliers might choose to pass through the cost of tariffs to consumers, other factors, including things like supply and demand, also affect prices.

Previously on Political Calculations

We regularly cover trade between the U.S. and China. Here's our monthly coverage spanning trade data from early 2024, which describes how imports first fell in response to the Biden-Harris administration's anti-free trade policies and tariffs, then surged as importers sought to beat the clock on new tariffs going into effect in early 2025, then fell again after those tariffs were imposed.

• US-China Trade Decline May Have Hit a Bottom
• Trade Between U.S., China, and Rest of the World Falls in Storm of Anti-Free Trade Policies
• Diverging Trends in U.S. Trade with China and the Rest of the World
• U.S. Trade with World Slowly Recovers as Trade with China Slowly Falls
• US-China Trade Racing to Beat Clock on New Biden-Harris Tariffs
• US Imports Surge as China Beats Clock on Biden-Harris Tariffs
• The State of US-China Trade as New Tariffs Take Effect
• China's Exports Surge as Factories Resume Rush to Beat New Tariffs
• US-China Trade Turns Back Down
• A Trade Story in Charts
• The End of 2024 Sees Surge in Imports to U.S.
• US-China Trade Boosted by Frontrunning
• US-China Trade Slows After Frontrunning Ends
• US-China Trade Drops Ahead of Trump's "Liberation Day" Tariffs
• US-China Trade Plunges at Start of New Tariff War
• US-China Cargo Trade Sinks as 2025 Tariff War Takes Toll
• Negative Impact of US-China Tariff War Deepens
• U.S.-China Trade Rebounds on Boost from Chinese Exports of Rare Earths

References

Alberto Cavallo, Paola Llamas, and Franco Vazquez. Tracking the Short-Run Price Impact of U.S. Tariffs. [Ungated PDF Document]. 27 October 2025.

Cavallo, Llamas & Vasquez (2025). Domestic Goods in Affected and Unaffected Categories. [CSV data]. Updated 12 October 2025.

Image credit: Wooden blocks spelling tariffs on a table photo by Markus Winkler on Unsplash.

October 2025 broke an eight-month-long losing streak for dividend paying stocks in the U.S. stock market. The single number that summarizes the month is +22, which represents the net change in the number of favorable and unfavorable dividend actions recorded during the month when compared with those of October 2024.

The dividend changes announced in October 2025 were unambiguously positive. The number of unfavorable dividend changes announced during the month, such as dividend decreases and suspended (or omitted) dividend payments was flat year-over-year at seven, which falls well below the level that signals recessionary conditions are present in the U.S. economy. Favorable dividend changes, which include dividend rises and special (or extra) dividend payments were up by 22, accounting for the entire improvement.

That outcome stands out because many preceding months have been characterized by a falling number of favorable dividend actions, which have pulled the single number that captures all the stock market's dividend metadata into net negative territory.

The following table presents these figures and the month-over-month and year-over-year changes for October 2025's dividends:

The following chart visualizes the monthly counts of dividend increases and decreases from January 2004 through October 2025. Be sure to note the falling number of firms announcing dividend rises since early 2023, for which October 2025's dividend actions represents a potential break in a long-established downward trend.

The next several months of dividend metadata will confirm if October 2025's dividend actions are an outlier in an otherwise continuing downtrend or are perhaps the first indication that trend is breaking down to be replaced by a more positive pattern.

References

Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 3 November 2025.

Image credit: Calendar by Karen Arnold on PublicDomainPictures.net. Creative Commons Creative Commons - CC0 Public Domain.

Political Calculations initial estimate of median household income in September 2025 is $85,157. This estimate represents a $691 (+0.8%) increase over our initial estimate of $84,466 for the U.S.' median household income in August 2025.

Unfortunately, Motio Research's estimate of the nation's median household income in September 2025 is not available this month because it is a casualty of the Democrat senators' ongoing refusal to vote to end the federal government shutdown. Motio Research's estimates are based on survey data collected each month as part of the U.S. Census Bureau's monthly Current Population Survey, which has been suspended because of the shutdown.

We're able to get around that limitation because our alternate methodology for estimating median household income is derived from other data. We utilize aggregate wage and salary earnings data along with population data, both of which lend themselves to analysis using simple linear regression.

For both, we determined trends established in the data of the preceding 12 months, from August 2024 through August 2025, that we can project into the future. For September 2025, we project the U.S. resident population is 342,678,000 and the total amount of received wage and salary compensation is $13.1472 trillion. We used these estimates with the alternate methodology we've developed to produce our initial September 2025 estimate of U.S. median household income.

The latest update to Political Calculations' chart tracking Median Household Income in the 21st Century shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through September 2025. The inflation-adjusted figures are presented in terms of constant September 2025 U.S. dollars and are not seasonally adjusted.

Analyst's Notes

Since the BEA substantially revised its aggregate earned income data last month, we anticipate any revisions in the historic data from which we produced our projections will be very small. We won't know how that data may have changed until the BEA and Census Bureau resume operations.

It will be interesting to see how well our estimate based on projected aggregate earnings and population data compares with Motio Research's survey-based data. We're very much looking forward to that information as it becomes available. We're also very interested to see if the surge in median household income that Motio Research has captured in recent months is a sustained change in trend or if it is a short term outlier.

References

U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Population. [Online Database (via Federal Reserve Economic Data)]. Last updated: 26 September 2025.

U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Compensation of Employees, Received: Wage and Salary Disbursements. [Online Database (via Federal Reserve Economic Data)]. Last updated: 26 September 2025.

U.S. Department of Labor Bureau of Labor Statistics. Consumer Price Index, All Urban Consumers - (CPI-U), U.S. City Average, All Items, 1982-84=100. Not seasonally adjusted. [Online Database (via Federal Reserve Economic Data)]. 24 October 2025.

Image credit: U.S. Census Bureau. We modified the public domain image to make it more generally applicable beyond reporting the median household income from 2022.

The S&P 500 (Index: SPX) set a new record high of 6,890.89 on Tuesday, 28 October 2025 following a new trade truce between the U.S. and China over the weekend and big deals and earnings among AI companies on Tuesday. Unfortunately, that new record high came the day before the Fed cut U.S. interest rates and Federal Reserve Chair Jerome Powell said some things that upset investor expectations. The index went into retreat, ending the week at 6,840.20, up just 0.7% from the previous week's close.

After the Fed reduced the Federal Funds Rate by a quarter percent to a target range of 3.75-4.00%, the CME Group's FedWatch Tool projects one more quarter point cut to this base interest rate in 2025. That rate cut is still expected on 10 December (2025-Q4), even though Fed Chair Jerome Powell tried to cast doubt on whether the Fed will follow through with another interest rate reduction before the end of the year. The FedWatch tool captured that change in expectation by lowering the probability of a December rate cut from more than 90% to 63%.

In 2026, the FedWatch tool anticipates better than 50% probabilities for quarter point rate cuts on 29 April (2026-Q2) and 16 September (2026-Q3), though the potential timing of these rate cuts has become very fluid in response to Fed Chair Powell's comments.

The net effect of Powell's statements has been to keep investors focused on the current quarter of 2025-Q4 in setting current day stock prices. The latest update of the alternative futures chart shows the S&P 500's trajectory pacing the projection associated with investors focusing their forward-looking attention on 2025-Q4.

That's not much different than the projection for 2026-Q3, but the context provided by the market-moving headlines that communicate the now open question of whether the Fed will act to cut rates again in December 2025 sets the expectations associated with 2025-Q4 as predominant.

Monday, 27 October 2025

• Signs and portents for the U.S. economy:
• Bessent says US, China reach framework deal on rare earths, Trump's tariff threat -NBC interview
• China will delay rare-earths rules, buy US soybeans, Bessent says
• Trump inks deals on trade, minerals with Southeast Asian partners
• Thailand, US reach framework agreement on trade
• US, Vietnam agree to boost trade, tariffs on some Vietnamese goods may be removed
• Oil settles lower as OPEC plans to increase oil output
• Chicago Fed puts October unemployment rate at 4.35%, little changed from last official report
• Exclusive: Amazon targets as many as 30,000 corporate job cuts, sources say
• Fed minions, Bank of Canada minions expected to cut rates soon:
• Fed poised to cut rates this week, with more easing likely on tap
• Countdown to Fed cut: Bond investors scale back on longer-dated Treasuries
• Bank of Canada poised to cut rates to 2.25% amid economic slowdown
• BOJ minions get more data supporting plan to hike Japan's interest rates, JapanGov minion claims not coordinating with US on BOJ policies:
• Japan's leading indicator of service inflation perks up in September
• Japan, US did not directly discuss BOJ policy, finmin Katayama says
• ECB minions get mixed Eurozone economic data:
• Euro zone firms optimistic but profits are falling, ECB surveys show
• Wall Street rises to all-time high as tech stocks rally ahead of key earnings
• Wall St scales fresh highs on tech earnings, US-China trade optimism

Tuesday, 28 October 2025

• Signs and portents for the U.S. economy:
• US single-family home prices increase in August, FHFA says
• US companies step up job cuts amid uncertain economy
• Oil falls 2% as investors weigh Russia sanctions, OPEC+ output plans
• Fed minions expect to get new boss in 2026:
• Trump slams Fed chair, eyes replacement in a few months
• Bigger trouble developing in Eurozone:
• European companies cut jobs in response to slowing economy
• Wall Street ended higher as the S&P 500 tagged 6,900
• Wall Street indexes post record closing highs as Nvidia jumps, megacap earnings ahead
• Nvidia's stock market value nears record $5 trillion
• Nvidia's $1 billion stake sends Nokia to decade high on AI hopes
• Nvidia will build AI supercomputers for US Energy Department, announces total bookings of $500 billion
• Stellantis ties up with Nvidia, Uber to advance robotaxi development
• Lilly partners with Nvidia on AI supercomputer to speed up drug development
• Apple hits $4 trillion market value as new iPhone models revitalize sales
• Microsoft shares once again surpass $4 trillion valuation, joining Nvidia
• OpenAI may move forward with new business structure, partnership with Microsoft, regulators say

Wednesday, 29 October 2025

• Signs and portents for the U.S. economy:
• Oil settles higher on large drop in US stockpiles, trade optimism
• Trump announces trade breakthrough with South Korea on Asia trip
• Key US mortgage rate drops to 13-month low, industry group says
• US pending home sales come in flat in September even as mortgage rates ease
• Fed minions cut rates and end quantitative tightening as expected, but claim expected December 2025 rate cut may not happen:
• Federal Reserve cuts by another 25 basis points, moves to end QT
• Fed to end balance sheet reduction on December 1
• VIEW Fed delivers expected rate cut; Powell says December rate cut not assured
• Trump again targets Fed's Powell on interest rate cuts
• Fed's Standing Repo Facility hits record high as policy meeting outcome looms
• Bigger U.S. trade deal developing in China:
• Looming Trump-Xi meeting revives hope of US-China trade truce
• Exclusive: China buys US soybean cargoes ahead of Trump-Xi meet, sources say
• Trump says he may speak to China's Xi about Nvidia's 'super-duper' Blackwell chip
• Better economic growth developing in Japan:
• Japan says economy recovering led by capex in October
• ECB minions want a piece of the action with digital currencies:
• ECB must have active role in payments' evolution to protect public trust in money
• Wall Street ended mixed after Powell says Dec cut 'far from' a foregone conclusion
• Yields soar as traders dump bonds after Fed's Powell throws Dec rate cut in flux
• S&P 500 down slightly as Powell says December rate cut not a foregone conclusion
• Nvidia storms past $5 trillion valuation as AI boom powers meteoric rise

Thursday, 30 October 2025

• Signs and portents for the U.S. economy:
• Trump shaves China tariffs in deal with Xi on fentanyl, rare earths
• US gets rare earth reprieve from China, but not rollback
• China vows to boost US farm trade but leaves details unclear
• Trump says US to cut fentanyl tariff to 10% after talks with China's Xi
• Oil falls as investors assess US-China trade truce
• US pending home sales flat in September; job market worries likely dissuading buyers
• Fed minions focus investors on their December rate hike meeting:
• Fed adds wrinkle for markets with December cut now in doubt
• Bigger trouble, stimulus developing in China:
• China factory activity stumbles as export orders dry up
• BOJ minions hold Japan's interest rates steady, signal central bank will likely hike them soon despite inflation they promoted:
• Bank of Japan keeps rates steady
• BOJ Governor Ueda's comments at news conference
• BOJ chief signals chance of rate hike soon, says wage momentum key
• Core consumer prices in Japan's capital accelerate, keep BOJ under pressure
• ECB minions do nothing, start thinking about what, if anything, they'll do next:
• ECB keeps rates unchanged as economy holds up for now
• Lagarde's statement after ECB policy meeting
• ECB policymakers prepare for December showdown on inflation, rates
• Wall Street ended lower after disappointing big tech earnings
• Wall Street indexes fall as Meta, Microsoft drag, along with Fed rate concerns

Friday, 31 October 2025

• Signs and portents for the U.S. economy:
• Oil ends slightly up, trade choppy on report, denial of US attack plan on Venezuela
• Ample supply, subdued demand to curb oil prices despite geopolitical risks
• OPEC+ likely to agree small oil output increase for December, sources say
• Obamacare premiums double, adding post Halloween fright for US health insurance shoppers
• AI could rase U.S. labor productivity 15%, meaningful boost to GDP starting 27’ – GS’ Briggs
• Fed minions split on need for rate cut in December, see lots of banks needing fast cash to avoid liquidity problems:
• Fed's Waller calls for December rate cut, as hawks press for policy pause
• Fed's Logan says this week's rate cut was not needed, opposes one in December
• Banks tap Fed Standing Repo Facility in record numbers amid month-end pressures
• Bigger trouble, stimulus developing in China:
• China needs 4.17% annual GDP growth to meet 2035 goal, publication shows
• BOJ minions claim they really want to raise interest rates later:
• BOJ locks in near-term rate hike, yen may sway timing
• ECB minions see little Eurozone inflation, claim they'll do almost anything at next interest rate setting meeting:
• Euro zone inflation eases a touch in October but core steady
• ECB should keep "full optionality" at upcoming meetings: Villeroy
• Wall Street finished higher after a back-and-forth session while Amazon rallied
• Wall Street gains on Amazon boost but rate caution tempers enthusiasm

Despite many economic data reports remaining on hold because of the Senate Democrats' ongoing refusal to fund government operations, the Atlanta Fed's GDPNow tool's projection of real GDP growth in the U.S. during the recently ended 2025-Q3 ticked up to +3.9% because of positive existing home sales data, which comes from private sector sources. The BEA's first official estimate of GDP for 2025-Q3 however remains on hold.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull and bear who are getting tired of Federal Reserve officials playing a game of keep away with them for interest rate cuts".

Halloween is here once again, which means its time to celebrate our most unusual and most erratic tradition. For us, there's nothing more scary than being invited to sit in a chair that, well, might as well be the spawn of the devil.

This Halloween, we have three unusual chairs to feature, which in a first for us, all involve video presentations by their designers. Are you ready to have a seat? How willing would you be to sit in any of these chairs?

The Sinking Chair

It's rare that a single movie inspires the design of a chair, but when that movie is The Shining, what kind of seat do you think will come out of that inspiration?

In our first featured video, Philipp Aduatz introduces us to The Sinking Chair, which we think takes the idea of an uncomfortable park bench to a whole new level:

Want to know more about how to approach this chair? Core77 provides this interpretation guide:

The Sinking Chair—seemingly descending into a pool of vivid red—captures a haunting interplay between modern design and profound narrative. Crafted from 3D-printed concrete and inspired by Stanley Kubrick's The Shining, the work symbolizes the enduring traces of trauma. Its clean, architectural form contrasts sharply with the fluid, organic resin symbolizing blood, evoking unease and introspection.

This piece embodies the idea that design holds the power to confront deeply human experiences. By addressing themes of collective trauma and the cyclical nature of conflict, the Sinking Chair invites viewers to reflect on the scars of the past and how they shape the present. It subtly alludes to contemporary political developments, including the resurgence of authoritarian tendencies and ideological divisions, which echo historical warnings and reinforce the importance of vigilance and empathy.

he chair explores the delicate tension between what is submerged and what persists, urging contemplation of memory, fragility, and resilience. Through its evocative design and material innovation, the Sinking Chair bridges the emotional and the functional, sparking dialogue about the evolving role of design in engaging with the human condition. It challenges us to consider not only what design can achieve aesthetically, but also how it can evoke empathy, reflection, and healing in an increasingly complex and polarized world.

And you can sit on it. Though perhaps not as comfortably as you might like.

The Spaghetti Western Saddle Chair

In the early days of radio, motion pictures and television, lots of entertainment was themed around the Old West in the United States. Eventually, people got tired of the genre and moved on to entertainment in other settings, but before they rode off into the proverbial movie sunset, a number of low budget Westerns made by Italians gave them their last true popular and critical success. Spaghetti westerns, as they came to be called, brought something new and different to the old Western tropes.

Well, saddle up pardner, because this time, Italian designer Raffaella Mangiarotti has brought the spirit of the spaghetti western to your home furnishings, in the form of the Pepe Chair. The following video tells the story....

As the video makes clear, there's a lot of skill and craft that goes into making a high quality leather chair that can truly make you feel like you're atop a horse while you watch television or toil away at your desk job.

The Banality of Evil in the Form of a Chair

Imagine you've been on your feet all day. You'd like nothing better than to plop down in your favorite comfy chair. But no, the twisted chair designer at Isekai.Lab has a different idea. Before you even think about sitting, first you have to solve... a Rubik's cube. But not just any Rubik's cube. The one you need to solve is the chair they've designed for you to sit upon, after you've successfully solved it. And then, it's not even a truly comfortable chair you can relax in, but rather a small stool. Here's a demonstration of their vision of evil in action (click the image to start playing the video):

Previously on Political Calculations

• Outside the Box Thinking: The Ghost Chair
• Cathisophobia
• Chairs to Haunt Your Dreams This Hallow's Eve
• Chairs of Terror
• Furnishings Fit for Halloween
• Happy Halloween! Now Have a Seat...
• Markets in Everything: Scary Chairs to Sit Upon