--- title: "Why does inflation \"not play by the rules\" in the era of high tariffs? Two studies reveal the underlying logic" type: "News" locale: "zh-CN" url: "https://longbridge.com/zh-CN/news/271595783.md" description: "In the era of high tariffs, inflation has not risen significantly as economists expected. Research from the San Francisco Federal Reserve shows that tariff increases typically do not drive up inflation; instead, they may slow the rate of price increases. A study from Northwestern University also points out that the impact of tariff increases on inflation is limited, but they may harm economic development and affect consumer and business demand. Despite inflation being above the Federal Reserve's target, the economy continues to operate smoothly. Economists are calling for a deeper explanation of this phenomenon" datetime: "2026-01-06T03:12:58.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/271595783.md) - [en](https://longbridge.com/en/news/271595783.md) - [zh-HK](https://longbridge.com/zh-HK/news/271595783.md) --- > 支持的语言: [English](https://longbridge.com/en/news/271595783.md) | [繁體中文](https://longbridge.com/zh-HK/news/271595783.md) # Why does inflation "not play by the rules" in the era of high tariffs? Two studies reveal the underlying logic The highest tariff levels in nearly a century have not triggered the significant inflation that many economists feared. However, two recent studies indicate that such an outcome is not surprising. Economists at the San Francisco Federal Reserve analyzed relevant data from 1886 to 2017 and found that **previous tariff hikes typically do not drive up inflation. On the contrary, tariff increases can actually slow the rate of price increases.** Another independent research report released by economists at Northwestern University pointed out that **while tariff hikes may lead to a slight increase in inflation, the rise is very limited.** This is good news, but the bad news is that both research reports concluded that tariffs often harm economic development; the impact on consumer and business demand may be the reason why tariffs have a minimal effect on inflation. When U.S. President Trump announced broad tariffs last spring, economists widely predicted that this move would trigger soaring inflation, a stronger dollar, and a significant slowdown in economic growth. However, these predictions have largely not materialized. Since April of last year, inflation has risen somewhat and remains well above the Federal Reserve's 2% target, causing dissatisfaction among voters, but there has been no surge. The number of new jobs has decreased, and the unemployment rate has slightly risen, but the U.S. economy continues to operate steadily. Meanwhile, the manufacturing revival predicted by the Trump administration has also failed to materialize as expected. Jonathan Ostry, an economist at the University of Toronto, stated, "The mainstream economics community needs to provide an explanation for this issue." Basic economic principles suggest that tariff increases raise the prices of imported goods, typically leading to a one-time rise in inflation. However, historical data presents a more complex picture. San Francisco Federal Reserve economists Regis Barnichon and Aayush Singh found that **for every 1 percentage point increase in tariffs, the inflation rate decreases by 0.6 percentage points.** These two economists also discovered that **tariff increases are often accompanied by rising unemployment rates, which may help explain the puzzle of inflation trends.** The shock from tariffs increases economic uncertainty, suppressing business investment and household consumption. As economic growth slows, demand for goods and services declines, thereby suppressing price increases. Economists Tamarden Besten and Diego Känzig at Northwestern University analyzed data from 1840 to 2024 and found that after tariff increases, inflation typically rises slightly. However, **due to the shrinkage of import and export trade and the contraction of manufacturing activity leading to decreased demand, the impact of rising import costs is offset, resulting in a very limited overall effect of tariffs on inflation.** Although the overall economic growth in the U.S. has been good since the tariffs took effect last year, signs of weakness have begun to emerge. Since April of last year, job growth has stagnated, prompting the Federal Reserve to cut interest rates three times in the second half of 2025. Meanwhile, a key index tracking manufacturing activity fell to a 14-month low in December of last year Some economists believe that as companies gradually raise product prices, the tariffs imposed by the Trump administration will ultimately have a greater impact on inflation. Other economists point out that due to loopholes and exemptions in tariff regulations, the actual tariff rates paid by companies are lower than the officially announced nominal rates. A recent working paper jointly published by economists from Harvard University and the University of Chicago shows that **as of the end of September last year, the actual average tariff rate in the United States was 14.1%, significantly lower than the nominal rate of 27.4%.** Austri said that the historical fact that tariff increases harm the economy without raising inflation does not mean that history will inevitably repeat itself. The current level of U.S. import tariffs dates back to the 1930s, when the United States was on the gold standard and factories were widespread on Manhattan Island. 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