DATA AVAILABILITY
Ongoing updates can be found at the PRICING LAB.
The paper
In 2025 January Alberto Cavallo (Harvard University), Paola Llamas (Northwestern University) and Franco M. Vazquez (Universidad de San Andrés) in their paper “Tracking the Short-Run Price Impact of U.S. Tariffs” analyzed the short-run impact of the 2025 U.S. tariffs on consumer prices.
Data and Methodology
This study uses high-frequency retail microdata to measure how the 2025 U.S. tariffs affected consumer prices. The authors combine daily price data from five major U.S. retailers (covering over 80% of CPI commodities) with AI-based product classification and country-of-origin identification.
The methodology includes:
- Country-of-Origin Identification: Using UPC matching and generative AI to identify product origins (achieving 85-88% accuracy)
- AI-Based Trade Classification: Developing a hierarchical classification system to assign products 10-digit Harmonized System codes, enabling precise tariff exposure measurement
- Applied vs. Statutory Rates: Distinguishing between announced tariff rates and actual duties paid (applied rates), which averaged 23.8% versus statutory rates of 27.7%
- Price Index Construction: Building daily chained price indices using matched-model methodology to track price movements from October 2024 through October 2025
Key Findings
Retail prices responded rapidly and persistently to the 2025 tariffs:
- Immediate Response: Prices began rising within days of the March 2025 tariff announcements and continued increasing gradually over subsequent months
- Differential Impact: Imported goods prices rose roughly twice as much as domestic goods—6.2% versus 3.6% relative to pre-tariff trends between March and October 2025
- Pass-Through Rate: Retail tariff pass-through reached 24% after seven months, meaning roughly one-quarter of applied tariff increases were transmitted to consumer prices
- Spillover Effects: Domestic goods competing with tariff-affected imports also experienced price increases, suggesting strategic pricing complementarities
- Heterogeneous Effects: Lower-priced varieties showed faster and larger price increases than premium products, with potential distributional implications for lower-income households
- Inflation Impact: The tariffs contributed approximately 0.76 percentage points to the all-items CPI by October 2025, implying that inflation would have been around 2.24% instead of the measured 3% without the tariffs
