US Inflation Dips, but Economists Warn of Fallout From Trade War- wna24

Inflation in the U.S. eased in February, offering some relief after months of rising prices that had raised concerns among economists and policymakers. According to the Labor Department’s latest report, the Consumer Price Index (CPI) increased by 0.2% last month, while core inflation—excluding volatile food and energy prices—rose by the same amount.

The slowdown in inflation comes as new tariffs imposed by President Donald Trump ’s administration begin to take effect. However, while price increases have moderated for now, economists warn that ongoing trade tensions could lead to higher consumer costs and a potential economic slowdown in the coming months.

The dip in inflation comes as the Trump administration ramps up trade tariffs. Last month, the U.S. imposed a 10% tariff on all Chinese imports, adding to the tariffs still in place from Trump’s first term. These levies have now been doubled, and earlier this week, the administration also implemented 25% tariffs on steel and aluminum imports.

In response, countries like China and Canada have retaliated, slapping tariffs on American goods and introducing non-tariff measures—such as boycotts on U.S. liquor from Republican-led states.

The ongoing trade conflict has made the Federal Reserve’s job more challenging. Policymakers are now waiting to see how tariffs affect inflation and whether they will slow down overall economic growth.

Some economists warn that the U.S. economy could face stagflation—a scenario where inflation remains high while growth slows. This risk has become a growing concern as the trade war escalates, potentially pushing up prices while dampening economic activity.

With inflation cooling slightly in February, the Federal Reserve may hold off on immediate policy changes. However, the long-term effects of tariffs and global trade tensions will play a crucial role in shaping economic conditions in the months ahead.

As businesses and consumers adjust to these new economic realities, all eyes will be on whether inflation continues to slow—or if trade pressures push prices higher again.