How U.S. tariffs are hiding in plain sight

Despite a huge wall of U.S. tariffs on imported goods, Target hauls still cost roughly what they did last month. And the month before. And the month before that. No sticker shock. No sudden spike.

But it’s not that the tariffs aren’t doing what tariffs always do. It’s that companies are buying time.

For months, tariffs have sounded like a distant thunderclap: constant rumbling, no downpour. Prices at the supermarket haven’t jumped in a way that maps neatly onto the headlines; despite all the drama, the economy hasn’t buckled. If anything, the economic story since “Liberation Day” has felt weirdly muted. But the data — and the people who parse it for a living — are still saying that the quiet is the setup. Tariffs are taxes, and taxes don’t stay hidden forever. They work through ports, contracts, and production runs before they hit a cash register. And the experts still think the lag will end. Soon. 

Money doesn’t always speak with immediacy. The government’s sweeping tariffs — 10% baseline on most imports; 25% on autos and auto parts; 50% on steel, aluminum, and copper; 30% on Chinese goods (following an earlier 145% peak); and 50% on goods from Brazil — are working their way into grocery and hardware bills. But look around: Americans are operating under a carefully constructed economic calm, something that feels fragile, maybe theatrical, but is anything but random.

Start with the scoreboard. July’s Consumer Price Index rose 2.7% from a year earlier, unchanged from June, but the more telling “core” measure accelerated to 3.1%, the highest reading since February. That 3.1% isn’t a panic number, but it is a direction — and it’s pointing the wrong way for a central bank that still talks about 2% as a goal.

The labor side isn’t soothing, either. The economy added just 73,000 jobs in July, and unemployment ticked up to 4.2%, with earlier months revised down sharply — an unhelpful mix of cooler hiring and stickier prices that complicates the Federal Reserve’s next (and closely watched) move.

“[July’s CPI] print again suggests that the impact of tariffs on prices is more gradual than feared — even if it’s fairly pronounced in categories like furniture and AV equipment,” Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Wealth Management, said Tuesday. Added Chris Zaccarelli, chief investment officer for Northlight Management, “As the battle continues over whether or not tariffs will lead to persistent inflation, this month’s report did nothing to convince anyone.”

The calm before the storm

Goldman Sachs recently did the math on how long the quiet will last. Its economists estimated that, through June, U.S. companies have absorbed a hefty 64% of tariff costs, leaving consumers with a mere 22% and foreign exporters with the remainder. But Goldman’s analysts don’t think the tariff cushion will last. By the end of the year, Goldman predicted, about two-thirds of the tariff cost will be passed to consumers, nudging core PCE inflation toward 3.2%. This smokescreen isn’t accidental. Companies largely front-loaded inventory before tariff changes arrived, building a buffer to hide structural cost shifts.

But President Donald Trump didn’t like Goldman’s numbers. He blasted the company and its CEO, David M. Solomon, in a Truth Social post. “I think that David should go out and get himself a new Economist,” the president wrote, “Or, maybe, he ought to just focus on being a DJ, and not bother running a major Financial Institution.”

Still, all summer, policymakers have started talking about tariffs not as a headline, but as a pipeline. “Overall, I expect tariffs to boost inflation by about 1 percentage point over the second half of this year and the first part of next year,” New York Fed President John Williams said in mid-July, adding that the aggregate data so far shows only the “initial effects.” Richmond Fed President Thomas Barkin was blunter: “I do believe we will see pressure on prices,” he said in late June, while noting that earlier readings had shown only “modest effects” from new levies.

Four days ago, St. Louis Fed President Alberto Musalem described the policy trade-off as there being “risks now to both the inflation and jobs goals.” And earlier this month, Marina Azzimonti, a senior economist and research advisor for the Richmond Fed, pointed to lags in customs processing, legacy exemptions, and strategic delays as further reasons imported costs haven’t yet rippled through to shelves and scanners. Meanwhile, some firms are quietly negotiating cost-sharing, pushing parts of the burden further upstream.

What’s showing up in the numbers is the classic tariff pattern: a slow burn that intensifies as inventories roll, exceptions narrow, and companies stop cushioning the blow. That’s why a steady headline CPI and a firmer core can coexist; tariff pressure tends to creep in through goods categories and spill outward.

The Fed’s Williams laid out the mechanics: Price increases are already running “well above” trend in tariff-exposed items such as household appliances, luggage, and tableware, and tariff receipts jumped to about 8% of import value by May as earlier stockpiles cleared. He also pointed to a New York Fed survey that found that nearly a third of manufacturers and roughly 45% of service firms fully passed on tariff-related cost increases. The effects, he said, are still early — “but I expect those effects to increase in coming months.”

And that’s, well, just about now.

The macroeconomic cushion that has kept tariffs from being instantly visible is thinner than it was in the spring. Markets have treated the latest inflation release as survivable. And it is — for now. But survivable is different from sustainable. The Fed can talk about cutting rates in September only if the price impulse doesn’t broaden. Tariffs put a thumb on that scale. 

The first-term test case

If this all sounds theoretical, it shouldn’t. There’s a nearly perfect control experiment from 2018–19. In an analysis of Trump’s first-term tariff wave, economists Mary Amiti, Stephen Redding, and David Weinstein found “complete pass-through” of the import taxes into U.S. import prices and concluded that “the full incidence of the tariffs has fallen on domestic consumers and importers,” shaving about $1.4 billion a month off real income by the end of 2018. That’s prices doing what basic trade math says they’ll do when a tax shows up at the border.

Even in 2018–19, the pass-through into retail categories was staggered. Import prices adjusted fastest; shelf prices crept as contracts rolled and buyers traded down. But the aggregate lesson isn’t an ambiguous one. Amiti, Redding, and Weinstein summed it up in their paper: The U.S. “experienced substantial increases in the prices of intermediates and final goods,” with welfare losses on top of the tax burden. Put differently: The pain shows up, even if it takes a circuitous route.

Which brings us to the part of the story that matters for the rest of 2025: who pays next. 

If core goods categories start to widen beyond the early hot spots that economists have flagged, the consumer take-rate of the tariff bill will rise right alongside them. At some point, price wins the argument.

Even Wall Street’s street-side specialists are signaling shifts. Goldman’s David Kostin said in early July that the real question isn’t if tariffs matter, but rather whose margins or prices adjust first. Early second-quarter earnings show companies tentatively absorbing costs. But once inventory falls, expect a shift in tone — and prices — with little fanfare. At the end of July, the Yale Budget Lab calculated that effective tariffs could peak at 20.2%, the highest since 1911, translating to a painful $2,700 annual hit per household in 2025. Even with consumers adjusting, that’s an undeniable blow to buying power. 

When firms finally relent, it will be at margins, not just in dollar signs. The S&P 500 could shrink 1-2% in earnings per share for every five-point tariff hike. That’s not a theoretical shock. GM and other automakers are already flagging billion-dollar hits. Even companies such as Apple have taken extraordinary plucks at profitability amid rising commodity costs. That means corporate guidance downshifts, investment chills, and strategic caution spread throughout boardrooms.

The president, unsurprisingly, isn’t buying any critiques. In that same Truth Social post aimed at Goldman, Trump cast the tariffs as an unqualified win, claiming they’ve been “incredible for our Country, its Stock Market, its General Wealth, and just about everything else.” He insisted they’ve brought “massive amounts of CASH” into the Treasury without fueling inflation, and argued that “for the most part, Consumers aren’t even paying these Tariffs,” pinning the cost instead on companies and foreign governments. 

“It has been proven, that even at this late stage, Tariffs have not caused Inflation, or any other problems for America,” he wrote.

From rhetoric to reality

But tariffs don’t live on campaign slogans or Truth Social posts. They live on pallets, in shipping containers, on inventory sheets, and eventually, on receipts. So while the president insists consumers aren’t paying, the reality is unfolding more slowly — and more structurally. The sticker shock may be staggered, but the math is still the math.

What does that that slow-motion reality look like in practice? First, more visible increases in tariff-exposed goods that had been cushioned by earlier shipments — appliances and household furnishings are the textbook categories, but think broader: travel gear, tableware, certain electronics, select auto parts. The more a category is exposed to higher tariffs, the higher its prices have risen relative to the trend this year. Second, fewer workarounds. Some companies have successfully rerouted supply chains or leaned on alternative suppliers to mute the impact. As those channels crowd and exemptions fade, the price umbrella lifts. Third, psychology. Retailers can only stagger increases for so long before they reset list prices (rather than relying on half-measures such as shrinkflation).

All of that feeds the Fed’s fall dilemma. A September rate cut is still plausible if headline inflation behaves and if the labor market softens without breaking. But the central bank can’t wish away a tax on imports.

One tell over the next few months will be the composition of inflation. The July report’s stability at the headline level gave everyone relief; the uptick in core CPI was the rain cloud. Tariffs may not be showing up in a single headline number, but they’re already rewriting the script. As tariff-sensitive goods broaden, the core’s center of gravity can shift in a way that is hard for the Fed to dismiss, especially if a slower job market starts to amplify consumer sensitivity. The historical record says households will pay eventually; Goldman is waving a flag that “eventually” is on the calendar, not the horizon. If core prices start climbing the way history and data suggest, the Fed may have to choose between two losing plays: fighting inflation with politically unpalatable hikes or pretending this is just another blip.

The absence of sticker shock this summer isn’t proof that tariffs have no bite — it’s just proof that the bite hasn’t reached the customer. The tariffs are still moving through the system. The macro context — steady-ish inflation, wobbly hiring — has made the pass-through look more polite than it is. U.S. consumers haven’t seen the full impact yet because the system hasn’t stopped absorbing it. Experts expect the impact to land hard. And when it does, it won’t resemble a tax on China. It’ll feel like life just got a whole lot more expensive.