Inflation unexpectedly fell last month, but tariffs still loom

Inflation reached a five-month low in March, but 10% blanket levy may impact prices

April 10, 2025 04:00 pm

Labetskiy Alexandr/Shutterstock and Adobe modified by Blockworks

This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.

In some unexpected good news, inflation last month cooled to a five-month low. But tariffs remain a headwind moving forward.

The headline CPI for March rose 2.4% annually. That was lower than projected (2.6%) and down from February, which showed a 2.8% increase. On a monthly basis, prices actually fell 0.1%.

Core CPI (all goods, minus food and energy) increased 2.8% year over year last month — also down from February, when the core print came in at 3.1%.

As Felix Jauvin mentioned in his discussion of the markets, US equities early in the session were steady, still riding yesterday’s euphoria following Trump’s tariff pause announcement. But renewed trade war fears quickly overshadowed any inflation optimism.

While the White House may have paused its more aggressive tariffs for the next three months, the blanket 10% levy remains in place. That is, except for Chinese imports, which now face fees of 145%.

While 10% may be significantly less than most of the policies announced last week on “Liberation Day,” the levy still is expected to significantly impact prices. Plus, many sector-specific tariffs, like those on auto parts and cars, remain in place.

There’s also no telling what will happen in 90 days with these “paused” policies.

Let’s be honest, there’s no telling what will happen in the next 90 minutes.

Get the news in your inbox. Explore Blockworks newsletters: