Market Analysis

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U.S. President Donald Trump claimed on Tuesday that the country was generating substantial revenue from his trade tariffs, while also stating that inflation—especially on essential goods—had decreased.

“The United States is taking in RECORD NUMBERS in Tariffs, with the cost of almost all products going down, including gasoline, groceries... Likewise, INFLATION is down,” Trump posted on social media.

It was unclear whether Trump was referring to federal tariff revenue, which is typically paid by U.S. importers, or another metric.

Earlier this month, Trump initiated a contentious trade war with China, increasing tariffs to a cumulative 145%. In retaliation, China imposed a 125% tariff on U.S. goods.

However, Trump did ease some of the tariffs on Chinese electronics due to concerns over the economic consequences of a 145% duty on all Chinese imports. Additionally, he recently granted a 90-day exemption for countries outside of China targeted by his reciprocal tariffs.

Despite this, Trump indicated plans to announce new tariffs on electronics imports and pharmaceuticals, following a probe into electronics imports initiated earlier in the week.

Though tariffs are generally expected to be absorbed by U.S. importers and passed on to consumers, analysts have warned that this could drive up inflation, disrupt supply chains, and slow economic growth. 

Trump has previously promoted his tariffs as a way to generate fiscal revenue to help reduce the U.S. fiscal deficit, while also aiming to address trade imbalances with major U.S. trading partners.

Last week’s data showed that U.S. consumer inflation eased more than expected in March, although the full effects of Trump's tariffs on prices had yet to be seen. Core inflation remained relatively persistent.

Paraphrasing text from "Investing.com" all rights reserved by the original author