ING has warned that President Trump's trade brinkmanship, including new tariffs on 60 countries, could reignite inflation concerns — even as fresh data shows the economy is absorbing tariff costs better than many expected.
The Dutch bank's caution comes as the core Consumer Price Index for goods sits at 1.1%. That figure, which strips out volatile food and energy prices, suggests that so far, the impact of the tariffs has been muted. But ING argues that the latest round of trade actions, which target a broad swath of trading partners, may change that picture.
Tariffs on 60 countries
The Trump administration has imposed or threatened tariffs on goods from 60 nations, escalating a trade war that began with China and has now spread to allies and rivals alike. The new measures cover everything from steel and aluminum to consumer electronics and agricultural products. ING's warning highlights the risk that these tariffs will push up import prices, eventually feeding into broader inflation measures.
Core CPI for goods — a key measure of price pressures in the physical economy — remains at 1.1%, a level that suggests the economy is absorbing the tariff costs better than initially feared. However, ING notes that the full impact of the tariffs may not yet be reflected in the data, as businesses often absorb higher costs in the short term rather than passing them on to consumers.
What the data shows
The 1.1% core goods CPI reading is below the Federal Reserve's 2% target, giving policymakers some breathing room. But ING's analysts point out that the tariffs are a supply-side shock, not a demand-side one. That means they could push up prices without a corresponding boost in economic activity — a classic stagflationary risk.
"The tariffs are a wild card," the bank said in a note to clients. "If businesses start passing on costs, we could see core goods inflation rise sharply in the coming months." The warning is particularly notable because ING had previously been among the more optimistic forecasters on inflation.
Market and policy implications
Investors are watching the data closely. If core CPI for goods begins to climb, it could force the Federal Reserve to reconsider its current stance. The central bank has held interest rates steady in recent months, citing progress on inflation. But a tariff-driven spike could complicate that narrative.
The next CPI release is due in two weeks. That report will be the first to fully capture the impact of the latest tariff round. ING's warning suggests that even if the headline number remains low, the underlying trend may be shifting.
For now, the 1.1% core goods figure offers a measure of calm. But with tariffs on 60 countries now in place, the question is how long that calm will last.
