US inflation below expectations, tariff revenue plunges, fiscal space squeezed

RektRecovery · 2026-01-06T15:04:15+00:00

The US CPI is actually 2.7%, lower than Wall Street's forecast of 3.1%. Tariff policies have not triggered significant inflation as expected, and research from the San Francisco Fed shows that tariffs have a limited impact on price increases. Currently, US tariff revenue is declining, the fiscal deficit is worsening, and future spending gaps are becoming problematic.

RektRecovery

2026-01-06 15:04:15

Abstract generation in progress

【CoinPost】The latest data threw a surprise: the actual US CPI is only 2.7%, whereas Wall Street previously announced 3.1%, directly hitting the face.

Interestingly, after Trump announced that wave of tariff policies last year, everyone thought it would trigger runaway inflation. But what happened? Research from the San Francisco Fed found that historically, tariffs haven’t caused inflation as exaggerated as imagined. The reason is quite realistic—importers are not fools; they either relocate supply chains or find ways to get exemptions, essentially diluting the tax rate. So, tariffs hit the economy’s growth and employment more directly, but their impact on prices isn’t as fierce.

From actual data, tariff revenue is still declining: a high of $34.2 billion in October, dropping to only $30.2 billion in December. Calculations show that the current average effective tariff rate in the US is about 12%, contributing only around 0.9 percentage points to the Consumer Price Index (PCE), with 0.4 percentage points already absorbed by the market. In other words, the inflation shock may have already passed, and core PCE is expected to approach the 2% target within this year.

But here’s the problem. The Treasury Secretary previously claimed that tariff revenues could reach $500 billion to nearly $1 trillion, but independent estimates show that the actual revenue in 2025 will only be between $260 billion and $280 billion. The US fiscal year 2026 deficit has already piled up to $439 billion, and the total national debt exceeds $38.5 trillion. The decline in tariff revenue means that the funds for those spending projects planned by Trump are in question—where will the money come from?

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StopLossMaster

· 01-07 22:10

Wall Street has failed again, hilarious, their forecasting ability is worse than rolling dice. Tariffs are essentially a gap between policy implementation and reality; importers have already figured out the tricks. Revenue has been declining continuously, and the fiscal space is getting a bit tight.

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MysteryBoxBuster

· 01-06 15:32

Ah, Wall Street has failed again, their prediction ability is truly unmatched. As for tariffs, it's basically a game of strategy. Importers are more cunning than anyone else, and it's impossible to completely trap them. Revenue has already dropped by over 4 billion, yet they are still holding on. The government needs to step in and provide support.

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MondayYoloFridayCry

· 01-06 15:31

Wall Street has been proven wrong again. These CPI data are indeed quite interesting. The supply chain folks are really clever. As soon as tariffs are imposed, they immediately shift their positions, causing the Fed's forecasts to fall apart. Tariff revenue is still declining? That might be a bit of an overstatement about the fiscal space being squeezed, with only a 0.9 percentage point increase in PCE. Now Trump's tariff card is going to be criticized again for being ineffective. The real pain point is employment. I kind of get why economists say that tariff policies are a "seven-injury fist"—hurting others and oneself without producing the desired results. People have already left, so how do they collect the remaining taxes? Hasn't this logic been fully understood long ago? Tariff revenues fall short of expectations. Where will the US government patch the holes? Will they start talking about debt issues again? The costs of relocating supply chains have been absorbed by businesses, so consumers haven't really felt much pressure? This logic is a bit of a dead end.

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PerennialLeek

· 01-06 15:23

Laughing out loud, Wall Street has been proven wrong again haha, predictive ability really is impressive Importers have long figured out this tariff game, it's just a matter of moving money from one hand to the other CPI is only 2.7%? Then what about my salary increase? Still negative growth Income is still plunging, the fiscal pressure is really getting bigger and bigger

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LightningPacketLoss

· 01-06 15:12

Wall Street has been proven wrong again. Is this round a loss? That set of tariffs seems to be just so-so. Importers are really clever; some have found ways to bypass them. The squeezed fiscal space feels even more painful. Inflation isn't skyrocketing, but employment is taking a hit. The US economy is really struggling. Tariff revenue dropped by 4 billion in a month. This trend doesn't feel right, brothers. CPI is at 2.7%. It looks good, but the bigger pitfalls are yet to come. Don't celebrate too early. Just shifting the supply chain a bit makes all policies useless. Economists can never keep up with reality.

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