By Brian Swint

The evidence is piling up that tariffs are already having an impact on the economy.

After Tuesday's inflation data that showed that prices of goods vulnerable to tariffs such as clothing and furniture are starting to pick up, there are more signs that the tax on imports is affecting the way companies do business. Data from the European Union and Switzerland on Thursday showed exports from those countries falling as the higher costs provide a disincentive to export goods to the U.S.

It's been a long time coming. Even though business and markets knew tariffs were likely, data from the first quarter was largely unaffected or even boosted by the threat as it encouraged stockpiling. Now that those built-up supplies are running out, importers have little choice but to pay up.

For investors, the risk now is that the slow drip of news on tariffs leads to complacency about the damage they might cause -- the Nasdaq stock index closed a record high yesterday. One analogy is that it's like frogs that supposedly don't jump out of water as it slowly heats to a boil because they don't notice the gradual change.

The next key data point will be the retail sales report out Thursday morning. That could shed light on whether the threat of rising prices is hurting consumer confidence or changing their spending patterns. Earnings reports from Swedish car maker Volvo -- owned by China's Geely Automobile -- and Pittsburgh-based aluminum producer Alcoa this week also revealed the impact of tariffs, with both companies saying the levies are raising costs.

On Wednesday, President Donald Trump the U.S. will soon send out letters to the more than 150 countries that haven't yet received them outlining their new tariff rates. It will be one rate for all of them, which will probably be a little over 10%.

Write to Brian Swint at brian.swint@barrons.com

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July 17, 2025 05:26 ET (09:26 GMT)

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