Analysts Warn: Expiring Trump Tariff Truce & Mideast Conflict May Push U.S. Summer CPI to 4%

Bloomberg Economics analysts warn of a perfect storm for inflation as two critical risks converge:

1. Tariff Time Bomb

• Trump-era tariff suspensions set to expire soon

• Potential revival of reciprocal tariffs on $300B+ goods

• Could disrupt global trade flows, reignite trade wars

2. Middle East Oil Shock

• Escalating conflicts risk $130+/barrel oil (vs current ~$85)

• Every $10 oil price rise adds 0.4% to U.S. CPI

• Summer driving season may amplify gasoline price spikes

Inflation Fallout

Projected impacts:

🔥 CPI nearing 4% by August (vs current 3.3%)

🦅 Fed rate cuts delayed until December or 2025

📉 Consumer spending squeeze from dual energy/tariff hits

Market Implications:

• Energy stocks rallying preemptively

• Treasury yields creeping higher

• Fed watch tools now price just 1.25 cuts in 2024

The Big Picture: This presents policymakers with a trilemma—contain inflation, avoid recession, and manage election-year politics. With Trump proposing new tariffs and Biden limited on oil reserves, markets face heightened volatility ahead.