By
Megan Cerullo
Megan Cerullo
Reporter, MoneyWatch
Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News 24/7 to discuss her reporting.
Updated on: September 12, 2025 / 12:01 PM EDT
/ CBS News
For much of 2025, the Trump administration’s wide-ranging tariffs defied forecasts that the import duties would drive up inflation. But that reprieve appears to be over, with economic data this week showing the tariffs are now pushing prices higher.
The Consumer Price Index in August rose at a rate of 2.9% from a year ago, accelerating from the previous month as President Trump’s tariffs filtered through the economy. Heavily imported goods saw some of the steepest price hikes last month, the data show. The increase represents the fastest rate of inflation since January, when Mr. Trump was inaugurated for his second term.
Although the tariffs were first announced in April on what Mr. Trump called “Liberation Day,” their implementation was largely delayed as the administration negotiated new trade deals with multiple nations over the ensuing months. That gave U.S. companies time to prepare for the new import duties, which are paid by U.S. businesses directly to the federal government.
Facing the prospect of sharply higher tariffs, some American companies scrambled to stock up on the imported goods and parts they use in their business, postponing the need to raise customer prices. Others absorbed the levies instead of passing them along to consumers.
But many companies are now pulling back from those strategies, economic data shows. According to the Federal Reserve’s latest “Beige Book” survey, which includes responses from businesses, economists and other sources, tariff-related price hikes were visible across the U.S. in August.
Beth Hammack, president and CEO of the Federal Reserve Bank of Cleveland, recently told CBS News that some companies facing a hit to their profit margins have no choice but to start passing on tariff-related costs to consumers.
Among the companies to say they are raising prices for some goods as tariffs take effect are home improvement giant Home Depot, retailer Macy’s and camera maker Nikon.
“The pass-through from tariffs is gradual because some businesses may have held on to a greater share of the costs and may have shared a greater burden of tariffs,” said EY-Parthenon chief economist Gregory Daco. “But there is a limit to how long and how much of that they can do — so there may be more of a push to pass those costs onto consumers.”
The White House said inflation remains low and that Mr. Trump’s policies are boosting the economy.
“Since President Trump took office, CPI is tracking at a 2.3% annualized rate, consistent with low and stable inflation,” White House spokeswoman Karoline Leavitt said in a statement to CBS MoneyWatch.
Leavitt also noted that data on producer prices out this week point to a decline in wholesale inflation. “As the Trump economic agenda continues to take effect, the trillions of dollars in private sector and foreign investments, historic tax cuts, massive deregulation and energy dominance that the president is spearheading will fuel an economic boom,” she added.
Tariff-fueled price hikes
Many types of goods that rely heavily on imports saw significant price hikes last month, the latest CPI report shows.
Coffee, for instance, is largely imported because there are only a handful of places in the U.S. where the beans can be grown, such as Hawaii and Puerto Rico. About 80% of unroasted coffee imports are sourced from Latin America, primarily from Brazil, according to the U.S. Department of Agriculture.
Products from Brazil that are shipped to the U.S. now face a 50% tariff, according to the White House. Once those import taxes kicked in, U.S. consumers in August shelled out 21% more for beans than a year earlier, according to CPI data.
Other products that are heavily imported and that, as of August, are seeing large price increases compared with a year ago include:
- Audio equipment: +12%
- Household furniture: +10%
- Bananas: +6.6%
- Women’s dresses: +6.2%
- Watches: +5.6%
- Motor vehicle parts: +3.4%
Strain on consumers
Prices are edging higher as worker wages are growing more slowly, straining lower-income households.
“It’s troubling that so many basic necessities now cost more. Food, gas, clothing and shelter all had big cost jumps in August,” Heather Long, chief economist at Navy Federal Credit Union, said in an email. “And this is only the beginning of the price hikes. The situation will worsen in the coming months as more costs are passed along to American consumers.”
Clara Moore, 44, a public-sector researcher who lives in Newark, New Jersey, told CBS MoneyWatch she is seeing prices “rising all over the place.” Her grocery bill has risen to about $250 per haul, from roughly $175 one year ago, she said.
Some economists think tariffs are likely to continue pushing inflation higher throughout the rest of the year, putting more financial pressure on families. As a result, many consumers will spend with more restraint, according to Daco.
“They are more cautious when it comes to their outlays. They haven’t stopped spending, but they’ll be more judicious from one month to the next. They’ll adjust their spending according to what they need and what’s affordable,” he said.
Moore said she’s had to cut back her spending on discretionary goods in order to afford the basics.
“I’m in the process of cutting out all of my streaming. I stopped ordering anything from Amazon — any impulse buying I have cut out,” she said.
Ryan Sweet, Oxford Economics’ chief U.S. economist, said consumers should expect to pick up about two-thirds of the cost of new U.S. tariffs on foreign goods.
“You’ll have a few of these increases spread out with each passing month, and you’ll see more of the tariffs passed on to consumers,” he said.
Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News 24/7 to discuss her reporting.
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