Import & Export Prices: Modest Changes in April

Many observers will probably scrutinize the report on import and export prices in searching for evidence on the effects of tariffs. This effort will be futile, as tariffs are not included in the prices captured by customs officials. Tariffs could have indirect effects on prices, which might keep analysts busy. For example, the announcement of tariffs, or even hints that tariffs might be imposed, could trigger increases in demand that push prices higher before the actual implementation of the charges. This may have been the case with industrial supplies, which rose an average of 1.3% in January and February before dipping in March and April. However, these changes were heavily influenced by fuel prices, which were probably driven by normal random volatility rather than tariff considerations.

In coming months, tariffs could possibly lead to price reductions in this report. Such an outcome could occur if foreign producers decide to absorb a portion of the tariff to remain competitive in the US market. By lowering their pre-tariff prices, foreign producers could dampen or eliminate the effects of tariffs on prices paid by US purchasers.

Import prices changed modestly in April (0.1%), but the subdued increase was probably a continuation of the soft pattern that has been in place for the past two years rather than efforts of foreign producers to counter the effects of tariffs. Import prices have followed the same general pattern as overall inflation during the pandemic and its aftermath: prices surged from late 2021 through mid-2022 before retracing a portion of the increases over the next year. Import prices have advanced modestly on balance since mid 2023. Indeed, the year-over-year change in April totaled only 0.1 percent. Net downward pressure on the prices of petroleum products helped to restrain overall import inflation, but nonpetroleum import prices also have been tame, with a year-over-year increase of 1.3% in April.

Export prices have traced a pattern similar to that for import prices: surging during the pandemic, retreating for a time in 2022-23, and changing modestly since. While the contours of export and import prices have been similar, the rate of advance on the export side has been quicker, as shown by a year-over-year increase of 2.0% for total exports versus 1.3 percent for nonpetroleum imports. Prices of capital goods, consumer goods, and automobiles have all contributed to the faster pace. Agricultural prices sometimes generate sharp swings in export prices, which can affect the underlying trend. This component rose more sharply than other export prices during the pandemic, and they eased at a faster pace once inflation started to cool. Agricultural export prices are now in line with those on other goods, with both ag and non-ag prices increasing 2.0% year-over-year in April.