Why we might not see tariffs in overall inflation numbers

Summary

Marketplace Morning Report: Why We Might Not See Tariffs in Overall Inflation Numbers
Release Date: July 14, 2025

In this episode of the Marketplace Morning Report, host Sabri Beneshour delves into the intricate dynamics of international trade tensions, specifically focusing on the impact of tariffs on inflation and the broader economy. The discussion encompasses the European Union's strategic delay of retaliatory tariffs, the nuanced effects of tariffs on consumer and producer price indices, and the impending copper tariffs' implications on global supply chains. Below is a detailed summary of the episode's key points, enriched with notable quotes and timestamps for reference.

---

1. EU's Strategic Delay of Retaliatory Tariffs

Timestamp: 01:02 - 01:25

The episode opens with Sabri Beneshour reporting on the European Union's (EU) recent decision to postpone retaliatory tariffs against the United States. This move aims to prevent a full-scale escalation of trade tensions and seeks to pave the way for a potential trade agreement between the EU and the U.S., despite ongoing pressures from President Trump.

Notable Quote:

Nancy Marshall Genzer (01:25): "President Trump sent the EU a letter over the weekend threatening to impose 30% tariffs on European exports to the U.S. starting August 1st."

---

2. Impact of Tariffs on Inflation and the Economy

Timestamp: 02:26 - 04:09

The discussion shifts to the nuanced relationship between tariffs and inflation. Sabri outlines the two primary measures of inflation: the Consumer Price Index (CPI) and the Producer Price Index (PPI). While tariffs are expected to increase the cost of imported goods, their impact on overall inflation rates appears muted.

Insights from Christopher Lowe:

Christopher Lowe (02:52): "Tariffs have in fact had a pretty profound effect on the economy. There is plenty of evidence of goods prices being higher, but it's not causing the overall inflation rate to rise."

Lowe attributes this phenomenon to the Federal Reserve's tight monetary policies, which aim to curb inflation but inadvertently slow economic growth and real income. As a result, consumers are compelled to reduce spending on services, mitigating the expected rise in the overall CPI.

Notable Quotes:

Christopher Lowe (03:11): "So as tariffs threaten higher prices, the Federal Reserve tries to tamp down inflation by keeping interest rates higher. But that comes at a cost. It slows down the economy and ultimately slows income growth."

Christopher Lowe (04:09): "Effectively, what's happened is tariffs have hurt growth rather than boosting inflation, in part because of the Fed's reluctance to cut. I just worry that if the Fed doesn't give some ground in the next few meetings, we're at risk of a deeper slowdown."

---

3. The Role of the Federal Reserve in Mitigating Inflation

Timestamp: 02:26 - 04:09

Christopher Lowe emphasizes the Federal Reserve's pivotal role in balancing inflation control and economic growth. By maintaining higher interest rates, the Fed aims to suppress inflationary pressures. However, this strategy also dampens income growth, leading to reduced consumer spending and a slower economy.

Key Takeaway: While tariffs increase the cost of specific goods, the Federal Reserve's measures to control overall inflation can overshadow these effects, resulting in a scenario where tariffs impact economic growth more than they influence broad inflation metrics.

---

4. Copper Tariffs and Their Global Implications

Timestamp: 05:55 - 08:36

A significant portion of the episode is dedicated to the impending 50% tariff on imported copper set to take effect on August 1. Copper, being a critical metal used in various industries—from construction to electric vehicles—plays a vital role in the global economy.

Insights from Industry Experts:

Dan Deyounga (06:30): "Since March, we've been seeing almost double the usual volumes of copper heading to the U.S."

Despite traders' efforts to capitalize on pre-tariff premiums, looming tariffs are causing shipments to be rerouted to other countries like China and Canada. Gracelyn Baskeran highlights the challenges posed by limited global smelting capacities, leading to potential supply chain backlogs and higher prices.

Notable Quotes:

Dan Deyounga (06:45): "You're not necessarily going to fully sort of complete the transaction before the tariff deadline. So I think, you know, that's why all of a sudden we're seeing a lot of volume sort of being rerouted."

Gracelyn Baskeran (07:24): "Traders are now likely going to wait to see whether the US Tariffs actually stick. And a lot of copper ore is probably just going to sit in storage instead of being processed into useful copper metal."

Ryan Young adds that copper's critical nature means its price fluctuations can ripple through multiple sectors, affecting everything from automotive manufacturing to electrical utilities.

Market Impact: In anticipation of the tariffs, copper prices have seen a downward trend, reflecting market uncertainties and the redirected flow of shipments. This shift not only affects traders but also American companies that may face increased costs for essential materials.

---

5. Conclusions and Future Prospects

Timestamp: 08:36 - End

As the episode wraps up, Sabri Beneshour summarizes the intricate interplay between tariffs, inflation, and economic growth. While tariffs are intended to protect domestic industries and penalize foreign competitors, their broader economic impacts are complex and multifaceted. The Federal Reserve's ongoing policies play a crucial role in mediating these effects, highlighting the delicate balance policymakers must maintain.

Final Thoughts: Even if tariffs do not prominently feature in overall inflation metrics, their repercussions on economic growth, supply chains, and specific industries underscore their significant role in shaping the economic landscape.

---

This episode of the Marketplace Morning Report provides a comprehensive analysis of the current trade tensions between the EU and the U.S., the nuanced effects of tariffs on various economic indicators, and the specific challenges posed by the upcoming copper tariffs. Through expert insights and detailed reporting, listeners gain a deeper understanding of the complex mechanisms at play in international trade and economic policy.

Transcript

[Wix Advertisement]

So you've got a business, but what about a brand? The difference More of you Wix gives you the freedom to create your website, own your brand and do it on your own, exactly how you envisioned it. Experience limitless customization. Boost your creativity and efficiency with AI tools for every part of your business journey. Scale up with built in SEO, E comm and scheduling features. Put more of you in your business. Go to wix.com and do it all yourself.

[Dell Advertisement]

This Marketplace podcast is supported by Dell Introducing the new Dell AI PC Powered by Intel Core Ultra processor, it helps do your busy work for you so you can fast forward through editing images, designing presentations, generating code, debugging code, summarizing meeting notes, finding files, managing your schedule, responding to long emails, leaving all the time in the world for the things you actually want to do. Get a new Dell AI PC starting at $699.99 at Dell.comai-PC how those ahead? Stay ahead.

[Sabri Beneshour]

How Europe is trying to keep trade tensions with the US from fully boiling over From Marketplace, I'm Sabri Ben, ashore in for David Brancaccio. The European Union has decided to delay retaliatory tariffs that were set to take effect today. The EU is hoping to reach a trade deal with the US Even as President Trump ratcheted up the pressure over the weekend. Marketplace's Nancy Marshall Genzer has more.

[Nancy Marshall Genzer]

President Trump sent the EU a letter over the weekend threatening to impose 30% tariffs on European exports to the U.S. starting August 1st. The president said if Europe retaliated, the U.S. would raise its tariffs on the EU by the same amount. Brussels did have countermeasures ready to go, but decided to delay them. Italy's foreign minister says the EU has prepared a list of proposed tariffs on U.S. products worth about $24 billion. Europe now says they could go into effect on August. Among the U.S. exports that could be tariff agricultural products, steel and aluminum products, clothing and shoes. A split is developing among EU members about whether to retaliate. The head of the bloc's international trade committee says President Trump broke the trust in trade negotiations. Meanwhile, Brussels is working on trade deals with other countries, including Indonesia, the Philippines, Singapore, Japan and Vietnam. I'm Nancy Marshall Genser for Marketplace.

[Sabri Beneshour]

This week we will get a couple different snapshots of what inflation is doing the consumer price index, that's at the retail level, and the producer price index, which is what inflation looks like from the perspective of wholesalers. Everyone wants to know, are tariffs gonna start showing up in the overall numbers? Cause so far they kind of haven't. But that does not mean tariffs aren't affecting the economy. Christopher Lowe is chief economist at FHN Financial in New York.

[Christopher Lowe]

You know, I think tariffs have in fact had a pretty profound effect on the economy. There is plenty of evidence of goods prices being higher, but it's not causing the overall inflation rate to rise. And that is in part because the Fed's running tight policy. Real income growth has slowed down.

[Sabri Beneshour]

So as tariffs threaten higher prices, the Federal Reserve tries to tamp down inflation by keeping interest rates higher. But that comes at a cost. It slows down the economy and ultimately slows income growth.

[Christopher Lowe]

A really significant slowdown in income growth means that consumers are forced to make choices, and as a result, tariff price increases in goods have led households to cut back on spending for services.

[Sabri Beneshour]

So we might not see tariffs in the overall inflation numbers, but we are seeing slower economic growth and that can cause pain for households all the same.

[Christopher Lowe]

Effectively, what's happened is tariffs have hurt growth rather than boosting inflation, in part because of the Fed's reluctance to cut. I just worry that if the Fed doesn't give some ground in the next few meetings, we're at risk of a deeper slowdown.

[Sabri Beneshour]

Christopher Lowe, Chief economist at FHN Financial Foreign.

[Wix Advertisement]

No offense, but your brain is a terrible place to keep your big idea. It belongs in the world. But you know that already. You have a calling, a voice that says, this is what I'm meant to do. Create the website your big idea deserves with wix. Make it your own with top to bottom customization, AI to help realize your vision and built in business tools to turn your daydream into your dream job. WIX supports every stage of the business journey except one. Your decision to begin ready go to.

[Neil Scarborough]

Wix.com greetings Marketplace listeners. It's Neil Scarborough, Vice President and General manager of your favorite business shows. I'm coming to you today with an opportunity to help shape the future of economic journalism and philanthropy. Marketplace's parent company, American Public Media, is looking for board members and we'd like to invite listeners like you to join either the APM Board of Trustees or or the Marketplace Philanthropic Council. If you believe in our mission to raise the economic intelligence of the nation and if you love building community through public media, we're looking for strategic innovative leaders to help ensure that Marketplace continues to evolve and expand its reach and impact across the country. Applications are open now through an extended deadline of Monday, July 14th. Visit marketplace.orgboard for more information. Thanks for your consideration and thanks for listening.

[Sabri Beneshour]

A 50% tariff on imported copper is set to take effect August 1. Copper is one of those critical metals. It goes in everything from pipes to electric vehicle batteries. And now that a tariff wall is about to go up, shipments originally headed for the US Are getting diverted to other destinations like China. Marketplace's Nova Sappho has more.

[Gracelyn Baskeran]

Commodities traders have been anticipating copper tariffs for months and they sent copper imports flooding into U.S. ports.

[Dan Deyounga]

They're trying to see can they take advantage of what I've been seeing called as a once in a generation trading.

[Gracelyn Baskeran]

Opportunity, selling copper at a premium and getting it into the country ahead of higher import taxes. Dan Deyounga has been watching this happen from his London based perch as lead copper analyst at Benchmark Mineral Intelligence.

[Dan Deyounga]

Already since March, we've been seeing almost double the usual volumes of copper heading.

[Gracelyn Baskeran]

To the US last week we learned that 50% tariffs are scheduled to kick in August 1st. And after that, traders will no longer be able to command a premium price. And yet they still had a lot of the stuff heading to the U.S. that's a problem.

[Dan Deyounga]

You're not necessarily going to fully sort of complete the transaction before the tariff deadline. So I think, you know, that's why all of a sudden we're seeing a lot of volume sort of being rerouted.

[Gracelyn Baskeran]

To China, Canada and elsewhere.

[Nancy Marshall Genzer]

The reality is that copper will probably.

[Dell Advertisement]

Just stay outside of the United States.

[Gracelyn Baskeran]

Gracelyn Baskeran is the director of the Critical Mineral Security Program at the center for Strategic and International Studies. She says traders are now likely going to wait to see whether the US Tariffs actually stick. And a lot of copper ore is probably just going to sit in storage instead of being processed into useful copper metal.

[Nancy Marshall Genzer]

You have to remember that there is.

[Dell Advertisement]

Limited smelting capacity globally. So it's likely also to potentially create backlogs in the global supply chain.

[Gracelyn Baskeran]

As we've learned through the COVID era, supply chain backlogs mean higher prices. And remember, copper is critical. It's in a lot of things. It can affect the auto industry, it can affect construction, plumbing, electricity. Ryan Young is senior economist at the Competitive Enterprise Institute. Electrical utilities because whether you're using fossil fuels or renewables, you're still going to use copper transmission wires. So in the short term, global copper traders walk away with hefty profits. Some copper shipments are diverted to China and elsewhere, and American companies pay more for the copper they can get. I'm Novasafo for Marketplace copper prices, by.

[Sabri Beneshour]

The way, down 1.5% so far today. In New York, I'm Sabri Benishour with the Marketplace morning Report from 8pm American Public Media.

[Rima Reyz]

Hey everyone. I'm Rima Reyz and I'm excited to join Kimberly Adams on Make Me Smart. Together, we'll unpack the day's news, whether it's a tariff switch up, the latest on Trump's immigration policy, or the future of clean energy. Join us each weekday so we can make sense of it all together, because none of us is as smart as all of us. Listen to Make Me Smart Wherever you get your podcasts.