• Kevin Hassett acknowledges tariffs are contributing to higher consumer prices but calls the effect a "one-off" level shift
  • Data shows tariffs explained roughly 0.5 percentage points of headline PCE inflation from June to August 2025
  • Only about one-third of predicted price increases have materialized so far, suggesting delayed pass-through

Kevin Hassett, who served as Director of the National Economic Council under President Trump, stated that the ultimate inflationary impact of tariffs enacted since early 2025 remains uncertain, despite clear evidence they are already pushing consumer prices higher.

Speaking recently, Hassett pointed to model-based estimates indicating tariffs explained approximately 0.5 percentage points of headline PCE inflation from June through August 2025. The measures contributed about 10.9% of the annual inflation rate as of August, with particularly sharp increases in goods containing high import content such as furniture and motor vehicle parts.

Yet the full effect appears to be unfolding gradually. According to people familiar with internal administration assessments, only about a third of the predicted price increases have materialized thus far, suggesting either delays in cost pass-through or market expectations that the tariffs might be temporary.

Hassett argued these impacts represent what he called a "one-off" level shift in prices rather than ongoing inflation, telling attendees at a private briefing that supply-side policies are working to expand goods and services availability, which should eventually contain price pressures.

The comments come as the Trump administration has begun quietly scrapping tariffs on certain consumer staples and agricultural inputs in response to public criticism, according to two people familiar with the discussions who asked not to be identified discussing private deliberations.

Recent economic data shows the administration's trade policy has reversed the prior trend of declining inflation, with the annual rate climbing from 2.3% in April 2025—before the tariffs took effect—to 3% by September. The Federal Reserve has already cut interest rates due to a weakening job market, despite inflation remaining above target, creating concerns that further rate cuts could reignite price pressures.

Efforts to reach Hassett for additional comment on the timing of full price pass-through were unsuccessful.

Meanwhile, voter frustration is mounting. Recent polling shows 67% of U.S. adults now disapprove of Trump's handling of the economy, citing affordability concerns and unmet promises to quickly reduce inflation. The administration has responded by floating the idea of direct consumer rebates, including a proposed $2,000 rebate funded by tariff revenues.

Whether the tariff effects will prove temporary or become embedded in the economy's price structure remains the critical question for policymakers. Some economists predict a plateau in inflation if tariffs aren't increased further, but rapid improvement in consumer sentiment appears unlikely without significant price declines or broader affordability measures.

Correction: An earlier version of this article misstated the percentage of annual inflation attributed to tariffs. The correct figure is 10.9% as of August 2025.