Tariff Cost Pass-Through Varies: Just a third of manufacturers passed the full burden on to customers, while service firms were more likely to do so. A sizable share of manufacturers absorbed at least part of the cost.
Firms Explore a Range of Tariff Responses: While most firms plan to pass higher tariff costs through to customers, many companies are turning inward - absorbing costs, shifting suppliers, or pulling forward purchases.
Core vs. Supercore Inflation Trend Has Diverged: Core goods inflation (Core PCEPI) has begun to trend higher again, while supercore inflation — services excluding housing and energy — continues to decelerate meaningfully from its peak.
Inflation Expectations Recede: After ticking higher earlier in 2025, 1-year ahead inflation expectations have moved lower in recent months. The shift likely reflects expected easing services inflation, even as goods-related cost pressures have reemerged.
Producer Price Inflation Picks Up: Producer prices rose 0.9% in July, the largest monthly gain since 2022. The increase follows several months of relatively subdued readings and may suggest renewed momentum in cost pressures.
Tariff Frontloading Drives Import Spike and Reversal: US imports of consumer goods surged earlier this year as companies rushed to bring in inventory ahead of anticipated tariffs. That frontloading has since unwound sharply, with import levels now falling below mid-2024 trends.
Tariff Revenues Surge: Meanwhile, US tariff collections have risen sharply in recent months, reaching nearly $30 billion in July — a 240%+ increase from a year earlier.
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Groupthink is bad, especially at investment management firms. Brandywine Global therefore takes special care to ensure our corporate culture and investment processes support the articulation of diverse viewpoints. This blog is no different. The opinions expressed by our bloggers may sometimes challenge active positioning within one or more of our strategies. Each blogger represents one market view amongst many expressed at Brandywine Global. Although individual opinions will differ, our investment process and macro outlook will remain driven by a team approach.
