Tariff Exposure
Macro
Imported input prices not showing tariff bump
Common question of late: which industries are most exposed to tariffs?
One approach is to look at the BLS’s input price indices. These are not quite PPI-ID. They are experimental indices that are organized by industry rather than FD-ID. Moreover, they focus explicitly on the prices for net inputs into industries. From the BLS: “These indexes measure price change for the net inputs consumed by most 3-digit North American Industry Classification System (NAICS) industry groupings, excluding capital investment and labor. The new satellite series are not official statistics and are separate from the existing official Producer Price Index (PPI) inputs to industry series. These satellite series, however, improve upon the existing inputs to industry indexes by adding prices for imported inputs from the Import Price Index. The satellite indexes also cover a far larger portion of the economy than the official input indexes, which are only available for construction industries and a very limited number of mining, manufacturing, and services industries.”
One cool feature of this series is that prices domestically produced inputs are separated from those that are imported. Moreover, the relative importance of domestic vs imported is provided for each industry.
I computed the 3mth % Delta of the price of imported inputs as of July. When July data wasn’t available, I used June.
I’m surprised. Business inputs of Imported Goods generally are deflating, not inflating.
Moreover, most of those that are highly exposed to tariffs (i.e. high % of imported goods into their production process) have relatively stable prices.
You can interact with the plot above my hovering over the bullets to see the industry.
Support activities for agriculture seems to be in the most precarious situation. Nearly 35% of it’s inputs come from imported goods, and the price of those inputs is rising roughly 2.7% in the last 3mths.
Computers and electronics as well as petroleum and coal are also highly exposed, but their prices are flat/deflating, at least for now.
Among the many potential caveats: tariffs hit imported goods directly, but may influence other products indirectly.