From Yahoo Finance: 2025-05-12 05:05:00

President Donald Trump’s sweeping tariffs are helping to tamp down inflation by raising global recession fears and crimping Americans’ finances. Gasoline prices have fallen recently due to weaker global oil demand, making it challenging for the Federal Reserve Chair to explain why interest rate cuts are on hold.

Trump lashed out at Powell, calling him a fool on social media. Some of the inflation-softening effects of tariffs are already visible, with overall inflation dipping to a five-month low in March. The trade war and other factors contributed to the benign inflation readings.

Tariffs have significantly slowed trade and stoked global recession concerns, pushing down U.S. crude oil prices. The decline in oil prices, along with other factors, has led to lower gasoline prices. Foreign travel to the U.S. has decreased due to the trade war, affecting household spending and airline fares.

While financial service fees have fueled inflation in the past, a recent stock sell-off has left the market volatile. The effects of tariffs on inflation are expected to intensify in the coming months, with core inflation projected to rise. Despite current trends, tariffs are expected to boost inflation in the near future.

Economists anticipate core inflation to rise by the end of the year despite current inflation numbers looking positive. The boost to inflation from tariffs is anticipated to come later this year. The impact of tariffs on inflation is still a developing situation that may change in the future.

Read more: CPI report: Trump’s tariffs earn some points for slowing – yes, slowing