Morgan Stanley: Tariffs will cause U.S. prices to rise by about 1 percentage point in the coming months.

On August 4, Jin10 reported that U.S. May import data showed that the effective tariff rate was 8.3%, significantly lower than Morgan Stanley's benchmark forecast of 10% to 15%. However, it is expected that the rates for June and July will trend towards the forecasted values. Transportation delays, higher-than-expected import volumes from Mexico and Canada under the USMCA, and a significant decline in imports from emerging markets are the main reasons why the actual rate is below expectations. As June and July data may show an increase in the effective tariff rate, the transmission effect on U.S. inflation will become more apparent. Historically, the actual impact of tariffs on consumer prices typically manifests 3 to 5 months later, while the chain reaction on economic growth appears after 3 months. Morgan Stanley expects that tariffs in the coming months could lead to an approximate 1 percentage point increase in prices, which will gradually dissipate as demand weakens.