UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Old price data still interests'
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Dec 3, 2025 September import price inflation may seem outdated, but it still holds significance for economists. Interestingly, importers bear the legal responsibility for tariffs, while exporters might lower pre-tariff prices. When this discounting doesn't happen, the tariff burden shifts along the supply chain. Additionally, product-specific trends, like deflation in electronics, can cloud the overall picture. Paul also highlights the importance of comparing US import prices with other countries and discusses the implications of a recent boom in factory building amidst changing production dynamics.
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Who Legally Pays Tariffs
- Exporters cannot legally pay tariffs; import prices are recorded before tariffs are applied.
- If exporters discount to offset tariffs, lower pre-tariff import prices will show that effect.
Discounting Shows Up In Import Prices
- Exporter discounts to offset tariffs appear in import price data because import prices exclude tariffs.
- If discounts don't occur, the tariff burden shifts further down the supply chain and raises costs elsewhere.
Look Beyond Headline Import Prices
- Headline import price changes can mask product-specific disinflation or deflation trends.
- Comparing price trends across countries helps reveal whether tariff effects or global price moves drive changes.