Former Trump administration head of financial coverage Tomas Philipson discusses President Trump’s commerce talks with South Korea and Japan, present U.S. economic system post-tariffs and immigration on ‘The Bottom Line’.
FIRST ON FOX: A brand new report from the Council of Financial Advisors (CEA) discovered that the costs of imported items have fallen this 12 months and have dipped sooner than general items costs since February.
The CEA, an company throughout the Govt Workplace of the President, stated its findings contradict claims that the Trump administration’s tariffs on many international locations around the globe or fears sparked by the levies would result in an increase in inflation.
The report breaks down the Private Consumption Expenditure (PCE) Value Index, which is an inflation gauge watched intently by the Federal Reserve and monetary markets, and the Shopper Value Index (CPI), which is an inflation gauge mostly utilized by the general public, into imported and home parts.
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President Donald Trump holds up a chart of “reciprocal tariffs” whereas talking within the Rose Backyard on the White Home on April 2, 2025. (Chip Somodevilla / Getty Photos)
Total items costs within the PCE index jumped by 0.4% from December by means of Could, which corresponds to a 1% annualized charge, in keeping with the CEA report. In the meantime, the imported element of PCE items costs dropped by 0.1% throughout that very same time interval.
“CEA’s directional findings using this method of analyzing the PCE are consistent across core goods (excluding food and energy), durables (which last for at least three years), and nondurables,” the report reads. “The import contribution to inflation includes both the direct impact of imported final goods for consumption and indirect effects of imported intermediate inputs.”
The report stated comparable evaluation for the CPI confirmed that imported items dipped 0.8% whereas general items costs remained flat.
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Stephen Miran, chairman of the Council of Financial Advisors, speaks through the Hill & Valley discussion board on the U.S. Capitol on April 30, 2025. (Getty Photos)
There are a number of variations between PCE and CPI inflation, akin to scope of merchandise included and weighting methodologies, in keeping with the report, which argued that discovering an analogous sample for CPI highlights the robustness of the outcomes.
The CEA report stated it in contrast the imported subindex to general costs from December by means of Could to seize the consequences of President Donald Trump’s insurance policies in his second administration.
“The results clearly show the price of imported components declining, starting in March, while overall prices were close to unchanged or increased slightly,” the report reads. “Cumulatively, overall PCE prices have increased by about 1.1% since December compared to about 0.2% for PCE import prices. However, those values include pricing for services, which tend to have lower import intensity, so the divergence could be due to stickier services prices.”
Stephen Miran exterior the White Home on June 17, 2025. (Getty Photos)
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The CEA additionally acknowledged that its evaluation “does not identify the counterfactual in which tariffs are not instituted.”
“Goods and imported goods prices started to diverge towards the end of 2023, and have continued since,” the report says. “Importantly, there is no clear trend break so far this year. This analysis suggests that tariffs have not reduced the disinflationary impulse from imported goods as of May.”
