① Research from the Federal Reserve Bank of San Francisco and Northwestern University indicates that tariffs harm economic growth and drive up unemployment, but their impact on inflation is much milder than expected. ② Research from Pantheon Macroeconomics shows that the revenue generated for the U.S. government by Trump’s tariffs has started to decline, meaning their influence on inflation will weaken over time.
Cailian Press, January 6 (edited by Xia Junxiong) Since former U.S. President Trump announced the so-called ‘Liberation Day Tariffs’ in April last year, economists have anticipated that the additional costs from tariffs would be reflected in inflation data. However, two recent studies have provided a negative answer.
Research from the Federal Reserve Bank of San Francisco and Northwestern University shows that, based on historical experience, tariffs do not trigger significant inflation spikes. This is because import companies often find ways to circumvent tariffs, or countries negotiate sufficient compromises and exemptions, thereby reducing the nominal tariff level.
Both studies indicate that tariffs harm economic growth and increase unemployment, but their impact on inflation is much milder than expected.
November’s inflation data also supports this view. The data shows that the unadjusted annual CPI rate for the U.S. in November was 2.7%, significantly lower than the market expectation of 3.1%.
In fact, according to a research report released by Pantheon Macroeconomics, the revenue generated for the U.S. government by Trump’s tariffs has begun to decline, meaning their impact on inflation will weaken over time.
The data shows that tariff revenue peaked at $34.2 billion in October 2025, then dropped to $32.9 billion in November, and further declined to $30.2 billion in December.
Pantheon analysts Samuel Tombs and Oliver Allen stated in a report to clients: ‘The latest trade data currently only extends to September, but reasonable projections for recent months indicate that the average effective tariff rate is approximately 12%, still clearly below the level estimated by independent fiscal oversight agencies.’
They estimate that the impact of tariffs on Personal Consumption Expenditures (PCE) inflation is only about 0.9 percentage points, with 0.3 percentage points absorbed by companies themselves.
‘Our calculations show that as of September, about 0.4 percentage points of the impact have already been transmitted, so the shock of tariffs on inflation has largely passed. Later this year, core PCE inflation is likely to approach the 2% target,’ Pantheon analysts wrote.
The report by Pantheon noted, ‘Tariff revenues are also significantly lower than the White House’s expectations; last August, Treasury Secretary Bessent predicted that tariffs would generate “… more than $500 billion, and possibly close to $1 trillion” in revenue.’
Independent research indicates that tariff revenues have fallen far short of this level to date.
The Bipartisan Policy Center estimates that tariff revenues will reach approximately $288 billion in 2025, while Politico projects $261 billion.
Tracking data from the Federal Reserve Bank of St. Louis shows that total tax revenues from production, imports, and tariffs amounted to $331 billion in the third quarter of 2025, with growth already slowing compared to the previous quarter.
According to a report by Bloomberg, the U.S. Supreme Court has set this Friday as the day for issuing its rulings, marking the first opportunity for President Trump’s global tariff policy to face adjudication. This announcement was made on the court’s website as the justices returned to work after a four-week recess.
Editor/Stephen