its worst first half in five decades. JP Morgan blames three things: tariffs, political attacks on the Fed, and shrinking U.S. growth. The result? A built-in premium on every euro, peso, and yen.
Every time the Fed looks politicized, markets nudge the dollar lower. When Trump demanded Lisa Cook resign, FX desks cut their positions. When Powell softened on rates, they pushed again. These aren’t symbolic moves—they price into every invoice Nancy and Coronell and a thousand other small business owners get every week.
“Undermine your central bank, and the risk premium shows up first on aisle four.”
Gina Huerta manages produce at a regional grocery chain near San Antonio. Every Wednesday morning, she walks the aisles with a clipboard, checking for items that need re-tagging. This summer, she’s doing it twice as often.
Tomatoes went first. Strawberries and avocados next. Bananas will be next week, she thinks, depending on how the new shipment lands.
“We try to hold the line. But by the time we get to the bottom of the pallet, the next one’s already more expensive.”
She doesn’t use the word “pass-through.” She just says: “The shelf doesn’t lie.”
Back in Portland, Nancy looks at the schedule. One of her weekend baristas just put in notice. Rent is up. Her coffee supplier switched shipping ports. Her landlord sent a “market adjustment” letter. She opens the cash drawer. Pete finally bought a pastry with his refill.
She smiles.
“Perishables move fast. Autos take a model year.”
Kelley Blue Book says tariffs could add $2,000 to $15,000 to new vehicles depending on where they’re assembled. Automakers are eating the cost—for now. But the 2026s start hitting in September. Powell said businesses are already signaling price moves. The inventory buffer’s gone.
At an auto lot outside St. Louis, the manager shrugs at the window stickers.
“This year we lost the rebates. Next year we lose the price floor.”
He nods toward a white sedan.
“That car? $28k today. $32k easy by Christmas. Unless you’re buying cash, most people won’t notice. But they’ll feel it.”
The inflation metrics are moving. The Cleveland Fed projects core CPI at 3.05% for August. The CBO says tariffs will add 0.4 points to inflation over the next year. But that’s not what shoppers see. They don’t see 0.4%. They see the drip coffee that’s now $3.59 instead of $3.25. They see fewer refills. Smaller chocolate bars. A second-hand car instead of a new one.