Tariffs Fail to Spark High Inflation, Defying Expectations

Despite sweeping global tariffs, the US has registered strong growth and stable inflation

Published on Feb. 14, 2026

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The global economy is soon to mark the first anniversary of President Donald Trump's tariff policies, which were expected to lead to a recession and high inflation in the US. However, the nation has instead seen blockbuster growth and stable inflation, even with the tariffs in place. The latest Consumer Price Index report shows annual inflation slowing to 2.4%, the lowest since May, defying predictions of skyrocketing prices.

Why it matters

Economists had forecast that the tariffs would lead to higher costs being passed on to US consumers and firms, but this has not materialized. The lack of widespread tariff-induced inflation is puzzling and requires explanation, as it goes against economic theory.

The details

Researchers at the New York Federal Reserve concluded that 86% of the tariff burden falls on US firms and consumers, while foreign exporters absorb only 14% through lower prices. This should lead to higher domestic costs. However, while there have been some one-time price increases, aggregate inflation levels have remained stable. Possible factors include businesses sacrificing profit margins, building up pre-tariff inventories, and being hesitant to pass on costs to consumers due to fear.

  • The global economy is soon to mark the first anniversary of President Donald Trump's tariff policies.
  • The Bureau of Labor Statistics published the delayed Consumer Price Index (CPI) report on February 13, 2026.

The players

President Donald Trump

The former US president who implemented sweeping global tariffs.

Bureau of Labor Statistics

The US government agency that publishes the Consumer Price Index report.

New York Federal Reserve

The regional Federal Reserve bank that published a paper on the tariff burden.

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The takeaway

The lack of widespread tariff-induced inflation in the US, despite economic theory predicting higher costs being passed on to consumers, is a puzzling phenomenon that requires further study. Factors such as business hesitance to raise prices, pre-tariff inventory buildup, and lower profit margins may have contributed to the stable inflation levels, challenging conventional economic wisdom.