He noted that President Donald Trump raised average tariffs to approximately 15%, and on some goods from China, they reach a temporary level of 125%. Modeling these tariffs shows that they could lead to a noticeable slowdown in economic growth and rising prices, creating risks of stagflation—a situation characterized by a combination of low growth and high inflation.
The economist also pointed to the negative market reaction to the escalation of tariffs. Investors began to fear a new rise in inflation; however, data from the summer period showed that inflation in the U.S. did not accelerate, but it also did not decrease.
“One of the reasons for this phenomenon was the preemptive increase in imports. American companies and foreign suppliers, anticipating the introduction of tariffs, increased shipments and built up inventories of goods at lower prices. Thus, at the beginning of 2025, the level of imports in the U.S. was significantly higher than in previous years,” Bloomberg reported.
At the same time, signs of a slowdown are beginning to manifest in the U.S. economy. The labor market is not demonstrating the same pace as before: while more than 100,000 new jobs were created each month previously, recently, employment growth has become minimal, and in some cases, there has been a decline. This increases the likelihood that the consequences of tariffs will coincide with an already weakened economic growth.
According to Bloomberg's estimates, the main burden of tariffs falls on American companies, which are currently compensating for rising costs by reducing profits rather than increasing prices. However, as Tom Orlik emphasizes, tariff revenues do not come “from nowhere,” and in the long term, they will be paid by businesses and households in the U.S.
