US Import Prices Down, Not Sustainable for Future
The price of U.S. imports saw the largest drop in two years as of June—but this drop is not likely to last after tariffs on foreign goods are imposed.
Import prices jumped by 0.9% in May, while June saw a sharp decrease of 0.4%, a dip that comes close only to the drop in February 2016, according to the Labor Department. Imported food saw a significant fall, coming in at a 2.6% decrease. The last time food fell this low was in February 2012. Petroleum also shook the market, falling 0.8% after a sharp 7.4% increase in May. Crude oil prices in general dropped in June as well.
However, these drops are not sustainable, according to a recent article in Reuters. The current presidential administration has imposed tariffs on imported lumber, steel and aluminum, which will inevitably raise the prices for July. The U.S. government has also called for 25% duties on $34 billion of Chinese imports. Previously, the president threatened 10% tariffs on $200 billion of Chinese goods.
“Odds are that the tariffs will begin to boost import prices,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania, in an interview with Reuters. “The inflationary impact of the steel and aluminum tariffs has been modest, partly because a number of countries initially were exempt, but that has changed.”
—Christie Citranglo, editorial associate