Import Prices Signal Low Inflation, China Reducing Prices To Fend Off Tariffs

U.S. import prices were unchanged in May, the Labor Department reported Tuesday, offering fresh evidence that inflationary pressure from global supply chains remains muted—even as tariffs rise and trade tensions persist.

The import price index, which measures prices at the border before duties and other tariffs are applied, showed no change from April and is up just 0.2 percent from a year earlier. The data provide a clean view of what foreign suppliers are charging American buyers, excluding any policy-driven price effects.

Prices for imported fuel fell 4.0 percent in May and are down 15.7 percent year-over-year, led by declines in petroleum and natural gas. Excluding fuel, import prices rose 0.3 percent in May and are up 1.7 percent from last year. Increases were led by nonfuel industrial supplies, capital goods, and consumer goods, including pharmaceuticals and autos.

The index excludes tariffs, so it reflects the prices foreign exporters charge before duties are applied. That means the data do not directly show if trade policy is contributing to inflation. But the data show no sign of generalized inflation in prices, suggesting that fears that higher inflation could result by making consumers less price sensitive or pushing up inflation expectations have not been borne out.

Import prices from China, for example, fell 0.2 percent in May and are down 2.1 percent over the past year. That decline may reflect price-cutting by Chinese firms to offset U.S. tariffs and remain competitive in the American market. Import prices from Mexico and Canada also declined in May, while prices from the European Union rose modestly.

The import data align with other signs of subdued inflation. Consumer prices rose just 0.1 percent in May, and producer prices posted similarly soft gains. Together, the figures paint a picture of broadly stable prices across the supply chain.