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On March 13, President Trump rolled out sweeping 25% tariffs on steel and aluminum, fueling fears of a global trade war.
US Inflation Cools Pre-Tariffs
On March 12, US inflation figures drew investor interest amid expectations that tariffs could drive prices higher.
The US annual inflation rate eased to 2.8% in February, down from 3% in January. Core inflation fell from 3.3% to 3.1%. The February numbers preceded Trump’s latest roll out of tariffs, including Wednesday’s levies on steel and aluminum.
However, February’s inflation figures failed to boost Fed rate cut bets. Markets expect tariffs to raise US import prices, fueling inflationary pressures. According to the CME Fed WatchTool, the chances of a June Fed rate cut fell from 84.2% on March 11 to 79.8% on March 12.
Economists attributed softer inflation to falling airfares and car insurance costs, though these will have limited influence on the Fed’s preferred Core PCE Price Index.
Nick Timiraos, Wall Street Journal Chief Economics Correspondent, remarked:
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