Just as prices were beginning to cool, inflation is rising again—and tariffs may be to blame.

The June CPI (Consumer Price Index) report shows a 2.7% annual increase, driven in part by import cost surges tied to the Trump administration’s new trade policy. Treasury yields have climbed above 5% as investors brace for a longer Fed pause, despite White House calls for rate cuts.

“This is not transitory. This is structural,” one economist warned on Wednesday.

U.S. Small businesses are the amongst the biggest losers in the tariffs fiasco, because they are the ones paying them. Tariffs, or taxes on imported goods, are significantly impacting small businesses by increasing costs, disrupting supply chains, and potentially leading to job losses. Small businesses often operate on smaller margins and have limited resources to absorb these added costs compared to larger corporations. This can force them to raise prices for consumers, reduce production, or even face closure.

The Bottom Line

• CPI (a primary measure of inflation) rose for the third straight month
• Bond markets signal higher-for-longer policy
• Trump’s tariff expansion plan may complicate Fed decisions through fall
• Tariffs are adversely impacting US small businesses, and some may be forced to close due to financial distress.