As proof that no company can match China on price, Chinese producers of active pharmaceutical ingredients (APIs) and the key starting materials (KSMs) used to make them are slashing prices by up to 50%. Not even low-cost India – one of the largest importers of Chinese KSMs – can compete at those levels.
For the second time in less than two months, the CEO of a publicly traded company admitted that tariff cost burdens will not be passed down fully, if at all, to consumers. With one CEO saying tariffs were too low.
The trade deficit rose 32.5% in July and imports were up 5.9%, but much of this can be attributed to importers bulking up on orders as the full brunt of the “Liberation Day” tariffs were set to start in August.
The Congressional Budget Office (CBO) upped the ante on their estimate for fiscal deficit reduction last week, all due to higher tariffs that kicked into effect this month. Tariffs are offsetting tax cuts signed into law this summer in the One Big Beautiful Bill (OBBB).
It’s been three full months of record-high tariffs, and yet rolling 12-month overall inflation came in at 2.7% in July, the same percentage rate as June, according to last week’s Bureau of Labor Statistics (BLS) inflation report. Core inflation (CPI), which excludes food and oil, rose 3.1% in July, up from 2.9% in June.
The trade deficit fell 16% in June to a low $60.2 billion, the Bureau of Economic Analysis said on Tuesday, but despite a 3.7% reduction in imports, the goods deficit for the month was surprisingly resilient compared to recent years without tariffs.
On July 17, at an event at New York University, a member of the Federal Reserve Board of Governors, Christopher Waller, said that tariffs are not inflationary. “Tariffs are one-off increases in the price level and do not cause inflation beyond a temporary surge,” he said.
An economist with the San Francisco Federal Reserve wrote in their “Economic Letter” from July 14 that tariffs are going to lead to much higher inflation in the weeks ahead. There’s just one caveat, and senior economist Mauricio Ulate admits it up front.
Tariffs on Southeast Asia will go up at least two-fold by August 1 from the current rate of 10%, based on screen-shot letters President Trump shared on his Truth Social account on Monday.
A Market Access Charge (MAC) might be the perfect addition to the tariff agenda; a surgical tool to tax capital inflows.
