Tariffs of at least 10% on imports from about 60 countries are set to hit the US starting July 24, 2026, raising concerns about inflation's path ahead. ING analysts point out that while core goods prices had only risen 1.1% year-over-year earlier this year, new levies could change that dynamic significantly.
During previous tariff rounds targeting appliances, consumers ended up absorbing more than 60% of the cost increase, leading to a 12% jump in prices. This time, the new tariffs cover nearly the entire import volume from the affected nations. ING cautions that if companies pass the full burden onto customers, inflation could spike by over four percentage points, although recent trends suggest a milder impact closer to one point.
While the economy has so far weathered tariff shocks better than some models expected, persistent policy unpredictability tends to push interest rates higher, increasing borrowing costs on mortgages and corporate loans. Investors should monitor core goods CPI reports this August and September to see how the retail sector copes with the new cost structure.
Consumer discretionary firms with global supply chains face the greatest pressures, especially those sourcing heavily from the countries targeted by the tariffs. ING remains cautiously optimistic, assuming these tariffs mark an upper limit rather than a starting point for costs, but warns that any escalation could reshape inflation forecasts and borrowing costs much more dramatically.
