A tariff is a tax on the importer, paid when goods clear customs. Whether that tax shows up in consumer prices depends on who absorbs it.
If a retailer imports a widget for $10 and the tariff is 25%, the landed cost is now $12.50. The retailer can eat the $2.50 (lower margins), pass it through entirely (consumer pays $2.50 more), or some combination. In competitive markets with thin margins, most gets passed through. In markets with pricing power and durable supply relationships, more gets absorbed.
The aggregate math: US imports about $3.1 trillion in goods annually. About $400 billion is subject to the current tariff schedule at rates averaging 18-22%. At 50% pass-through, that’s roughly $40-45 billion in additional consumer costs. Against a $19 trillion personal consumption base, that is a bit over 0.2 percentage points of one-time price level increase.
The complicated part is sequencing. The price level shift happens fast, within a quarter or two of the tariff taking effect. Core inflation prints will be elevated for those quarters, then normalize as the base effect washes through. If the Fed tightens in response to a supply-driven price shift, it risks over-correcting. If it holds and inflation expectations drift up, it risks underreacting. This is the genuine policy difficulty, not the arithmetic itself.