The Effects of Tariffs on the Components of Inflation

Naomi Halbersleben, Oscar Jorda and Fernanda Nechio

FRBSF Economic Letter, 2026, vol. 2026, issue 07, 6

Abstract: Tariffs are usually applied to imported goods—but in an interconnected economy, their effects can be felt in the prices of other goods and services. Estimates using data across multiple advanced economies show that inflation declines right after tariffs are imposed. This initial decline reflects decreased demand, visible in declining prices for energy such as oil, a primary commodity typically exempt from tariffs. After the initial tariff shock, inflation gradually picks up, driven first by goods and later by services, one of the more persistent categories of inflation.

Keywords: tariffs; inflation (search for similar items in EconPapers)
Date: 2026
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