From Heritage Chief Economist EJ Antoni on X:
N.B.: this is an INDIRECT indicator of tariffs not being passed on b/c import prices have fallen relative to their domestic counterparts; that’s the result of a substitution effect and foreign producers’ attempt to retain market share by reducing their prices relatively speaking:
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Jul 17
Import prices just came in WAAAY below expectations: June was up just 0.1% M/M, -0.2% Y/Y, while May saw a huge downward revision from flat to -0.4% M/M; still waiting for tariffs to be passed on by foreign producers…
Note that Dr. Antoni is apparently using the all commodity imports price index. I think that, since no tariffs have been applied to oil, it would be more appropriate to use the import price index ex-petroleum.
Using this index, and Instead of plotting rates of change, I show price indices relative to 2025M04, given that the 10% tariffs were effective in early April.
Figure 1: Import price index for all commodities (blue), for commodities ex-petroleum (tan), all in logs 2025M04=0. Source: BLS via FRED, and author’s calculations.
Using this more appropriate series, I do not see the price decrease the Dr. Antoni refers to.
As an aside, I am still waiting for Dr. Antoni to declare the end of the recession he claimed started in 2022.
Note that Antoni is implying that importers must be eating the tariffs because import prices are flat. He doesn’t seem to realize that the import index he is citing is pre-tariff. If import prices are flat, then foreigners aren’t lowering their prices to pay for the tariffs — Americans are paying them, which are applied after the prices in his chart.