Uncertainty has gripped investors across all markets, fueled by the unpredictable nature of the administration’s tariffs. With sudden changes in both timing and tariff rates, it has become nearly impossible for businesses—especially those in retail, logistics, and manufacturing—to gauge the true impact or plan for the future.
But a team of researchers is shedding light on this confusion. In their ongoing study, “Tracking the Short-Run Price Impact of U.S. Tariffs,” Harvard’s Alberto Cavallo and Paola Llamas and Franco Vazquez from Universidad de San Andrés have developed a sophisticated system to monitor the effects of tariffs in real time. By combining high-frequency retail pricing data, detailed product-level country-of-origin information, and comprehensive tariff classifications, the researchers have managed to link daily prices from major U.S. retailers directly to product types and their countries of origin.
Their custom-built system isolates the direct effects of tariffs on specific product categories and trading partners, offering valuable insights not just for policymakers and businesses but also for commercial real estate owners who need to understand the pressures their tenants face. Impressively, the system can classify products as domestic or imported with 88% accuracy, and can predict the specific country of origin with 85% accuracy.
The researchers gathered daily price information by scraping data from the websites of four major U.S. retailers. They matched this data to country-of-origin details—either by searching UPC codes online or by using generative AI models to predict a product’s origin. Tariff rates were sourced from the U.S. International Trade Commission. By integrating all this information, the team was able to create price indices based on product category, country of origin, and tariff rate, which allowed them to analyze price movements around key tariff implementation dates.
Their findings were striking. After the April 2 “Liberation Day” introduction of tariffs, prices for imported goods accelerated sharply, mirroring the announcement of a baseline 10% tariff. A week later, when tariffs on Chinese goods soared to 125%, the price data reflected another spike. These patterns echoed the price movements seen during the initial U.S.-China trade tensions in 2018 and 2019.
While most price changes were modest, certain products—such as washing machines, which faced higher tariffs—saw more significant increases. The study also found that retailers responded rapidly to tariff shocks, and domestic products experienced price hikes as well. This may have been due to the use of imported parts or materials, or perhaps in anticipation of consumers shifting their preferences toward domestic goods.
Interestingly, the most recent Consumer Price Index (CPI) results did not show clear spikes related to tariffs. The researchers suggest this could be because many companies increased their orders ahead of the tariff deadlines, temporarily delaying the impact on prices.
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