Expensive Because of Trump – How Tariffs Are Driving Up the Price of Everyday Life

Inflation is back – not as a global fate, but as a political consequence. What economists have been predicting for months is now becoming apparent on the shelves, at the pump, and on Americans' bank statements: Donald Trump's massive tariff policy is pushing prices upward. That was reason enough to take the red pen to the budget. In June, consumer price inflation rose to 2.7 percent compared to the previous year – the highest level since February. In May, the inflation rate was 2.4 percent, and in April only 2.2. On a monthly basis, this means a price increase of 0.3 percent – twice as much as the previous month. The hardest hit were imported goods such as toys, clothing, kitchen appliances, sporting goods, and electronics. And although Trump regularly claims there is “no inflation,” the numbers tell a different story.

Behind the raw percentages lies a concrete scenario: household goods that remained stable in price for years are suddenly rising significantly. Gasoline cost 1 percent more in June than in May, groceries increased by 0.3 to as much as 0.6 percent. Oranges, primarily imported from Brazil, became 3.5 percent more expensive within a single month – not least because Trump is threatening a 50 percent tariff on Brazilian products. Mexican tomatoes, taxed at 17 percent, are also showing the first effects. The situation is particularly clear for durable consumer goods: according to Eric Winograd of AllianceBernstein, their prices increased year-over-year for the first time in about three years. He speaks of a “flashing tariff inflation” that is now finding its way through the system. At the same time, the dynamic of rental prices is slightly cooling – with an increase of 3.8 percent year-over-year, the smallest rise since 2021. But that is not enough to ease general price pressure, as the effect will not last long.

That it is precisely President Trump now calling for interest rate cuts intensifies the dilemma for the central bank. The Federal Reserve should “immediately cut rates,” he has repeatedly demanded – hoping for a key rate of around three percent instead of the current 4.3. But Fed Chair Jerome Powell remains skeptical. “Were it not for the tariff uncertainty, the Fed would already be cutting,” said Winograd – capturing the mood in much of the economic sector. Because Trump’s policy is more than just a pricing issue. It puts the Fed in a bind: tariffs increase inflation but simultaneously slow growth. Normally, the Fed would cut rates during an economic slowdown – but when prices are also rising, every move becomes a balancing act. Powell himself recently reiterated his warnings about the consequences of Trump’s tariff escalation – and now faces attacks from the White House. Trump publicly accused the Fed Chair of “incompetence” – and even criticized the renovation costs of Fed buildings, which are projected to reach 2.5 billion dollars.

There is also cautious criticism from the business world. Walmart, the world’s largest retailer, has announced partial price increases. Mitsubishi speaks of an average 2.1 percent markup, and Nike refers to “surgically placed” price hikes. At the same time, many companies are still sitting on inventory they stockpiled in the spring ahead of the tariff enforcement. Others are holding back – hoping that trade deals will be reached to reduce tariffs. But Trump has no such intention: 10 percent on all imports, 25 percent on foreign cars, 30 percent on Chinese goods, 50 percent on steel and aluminum – and starting in August, 30 percent on EU products. What is sold as “America First” means for many Americans simply: paying more for less choice. And a return to the political illusion that global dependencies can be broken with protectionist force – without having to pay the price in the end. But the reality at the checkout is harsher than any campaign slogan.