Trump’s tariffs start to bite, driving US inflation up in June

Headline US inflation climbed to 2.7% y-o-y in June, slightly exceeding the 2.6% forecast by analysts surveyed by Bloomberg. The jump suggests that US tariffs are starting to leave their mark on the consumer price index (CPI). Meanwhile, core CPI was up 2.9% y-o-y.

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Tariffs are getting all the blame. Prices for goods exposed to tariffs — including toys and appliances — rose at the fastest rates seen in years, according to the Bureau of Labor Statistics. Tariff impact is still modest, as businesses have likely absorbed a large portion of the costs so far, Cornell University Economics Professor Eswar Prasad told the Financial Times. This will likely change if Trump moves ahead with additional tariff threats, leading to higher costs passed to customers, Prasad says.

Global impact? Trump’s tariffs may impact consumers beyond the US market, as global brands are considering spreading costs across markets, Proxima Executive VP Simon Geale told the FT. Smart sourcing and cost savings strategies may not be enough to soften the impact of tariffs on US consumers if prices rise beyond 5%, Geale added.

Most trading partners opted for negotiating their way around the problem, with only China and Canada opting for retaliatory tariffs. Meanwhile, the EU steered clear from open confrontation with Trump, welcoming a backchannel opened by US Treasury Secretary Bessent, as well as adding military support for Ukraine to ongoing negotiations.

BUT- Appeasing can be a slippery slope: The EU Trade Commissioner cautioned that a 30% US tariff could halt transatlantic trade, leaving the bloc with “nothing to lose” and likely provoking retaliation. This creates a difficult strategic choice, as avoiding retaliation in the short term may lead to ceding long-term dominance of global supply chains to the US, head of global economy at Chatham House Creon Butler said.

US coffers are swelling in the meanwhile: Customs revenues soared to a record USD 64 bn in 2Q 2025, funneling an additionalUSD 47 bn into the US treasury compared to the same period last year.

MARKETS THIS MORNING-

Asian markets are mostly in the red this morning, led by Japan’s Nikkei inching down 0.3% after trade figures showed Japanese exports fell for the second month straight. Wall Street futures are also indicating a lower opening ahead.

THE CLOSING BELL: TADAWUL-

The TASI fell 0.5% yesterday on turnover of SAR 4.0 bn. The index is down 8.3% YTD.

In the green: SHL (+4.8%), Cenomi Centers (+4.2%) and Mutakamela (+3.7%).

In the red: Emaar EC (-3.6%), Ardco (-3.3%) and Alistithmar Reit (-3.3%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.2% yesterday on turnover of SAR 21.0 mn. The index is down 13.1% YTD.

In the green: Riyadh Steel (+10.5%), Alhasoob (+9.4%) and Leen Alkhair (+8.7%).

In the red: Mulkia (-8.4%), Tam Development (-5.4%) and NBM (-5.0%).

CORPORATE ACTIONS-

Mulkia Investment will boost its capital by 20% to SAR 78 mn via a bonus share issuance, it said in a disclosure to Tadawul. The SAR 13 mn capital increase will be funded with retained earnings, issuing to shareholders one bonus share for every five shares held at a date yet to be determined. The raised capital is earmarked for shoring up the company’s financial position, supporting growth plans, and boosting shareholder returns.