It’s been a year since Independence Day, and Americans are still feeling the toll.
US trade policy has changed frequently since President Donald Trump announced sweeping tariffs, including higher tariffs on major partners like China and the European Union. Retailers such as Walmart and Target raised prices to compensate, and some customers received “charge bills” in the mail after shopping online.
Although many of the policies have been reversed – or shot down in February’s Supreme Court decision – the impact on American businesses and consumers has not ended. After that high court decision, the administration announced a global tax of 10% that could last for 150 days.
Despite the policy changes, the impact of Trump’s tariffs on Americans’ wallets has been mild over the past year. It is feared that the rise in inflation during the past year was milder than expected, and there has been no significant change in the general price of basic goods. Tariffs may not be driving America’s affordability problems, but companies and consumers remain uncertain about their financial future.
“The tariffs have had an impact on the industry,” Zach Negin, who owns a winery in Los Angeles, told Business Insider in October. “We like to have wines from different places because it depends a lot on the place. It’s the story, the history and the love of it. When you don’t have the opportunity to find those things because they are expensive, it reduces our ability to have different types of products.”
Interest rates are different, but their impact on inflation is reduced
Late fees have hurt everyone from CEOs to consumers, although they have had negative effects on stock prices. The Penn Wharton Budget Model shows what the effective rate of interest, adjusted for the way consumers and businesses move away from importing the goods involved, has been since Independence Day.
The rate peaked in April and rose slightly each month before reaching 11% in August, when Trump’s reimbursable tariffs went into full effect. The rate peaked in October and has fallen since then, but is expected to remain higher for a shorter period than before Trump’s second term.
Jason Draho, head of U.S. asset allocation for UBS Global Wealth Management, previously told Business Insider that the rates aren’t causing the “significant increase” in inflation that people were expecting, but they are still driving prices.
Economists and analysts have noted that it is difficult to determine how much tariffs have contributed to the decline in prices because there are other factors. Elizabeth Renter, chief economist at NerdWallet, previously told Business Insider that Supply and demand-driven issues also push prices up, e.g.
In a statement to Business Insider, Gabriel Agostini, vice president of macroeconomic research Moody’s Ratings, and Atsi Sheth, chief credit officer of Moody’s Ratings, pointed to the exchange rates of individual countries and the pricing policies of firms as factors in how many tariffs affect the prices of different goods.
They said that in the year before Independence Day, the prices of basic goods (excluding food and energy) were lower than the general price, but from April 2025, the basic prices “added by 0.2ppt to the headline CPI inflation, suggesting the effects from tariffs. That said, it is important to emphasize that this is not the final price and the final relationship.”
Fed Chairman Jerome Powell said that the rate policy has shaped interest rate decisions last year, especially since inflation is still above the central bank’s target of 2%, although he said that the tax is a “one-time” shock to the economy, and is unlikely to have a long-term effect. High oil prices due to the Iran war are a very big player in the current inflation story, he said at the Fed’s March meeting.
Powell said the Federal Open Market Committee expects inflation to recover. He said: “Not as we hoped, but some progress on inflation.” “It should come when we start to see in the middle of the year the progress of the rates more than once, and then the prices of the prices come down.”
“One year since Independence Day, President Trump has changed the world trade system and ended decades of outsourcing for hard-working Americans,” Kush Desai, a White House spokesman, told Business Insider. “President Trump has used tariffs aggressively to renegotiate trade deals, save trillions in manufacturing investment, and lower drug prices.”
Although the tariffs have had a modest impact on the broader economy, small business owners say they have been successful.
Michael Salvatore, who runs coffee shops and bars in Chicago, told Business Insider last fall that he “can’t do business with uncertainty,” especially since many of the goods he relies on, from paper products to coffee beans, are manufactured or grown abroad.
“Every day is a win or a loss, and you can’t run a business that way,” he said. “This uncertainty creates this heat where I will stop making any big decisions because I don’t know how that will affect my bottom line tomorrow.”