Research

# Imported Goods Have Been Getting Cheaper Relative to Domestically Produced Goods

The White House
July 7, 2025
Import Contribution to PCE Inflation Download

Imported Goods Prices Falling, Not Rising

The Council of Economic Advisers (CEA), after decomposing the Personal Consumption Expenditure Price Index into imported and domestic components, found that the prices of imported goods have not only fallen this year, but also declined faster than overall goods prices since February. These findings contradict claims that tariffs or tariff-fears would lead to an acceleration of inflation.

More commonly referred to as PCE or PCEPI, the Personal Consumption Expenditure Price Index is an inflation gauge watched closely by policymakers and financial markets. Overall goods prices in the PCE index have increased by 0.4 percent from December 2024 through May 2025, which corresponds to a 1 percent annualized rate. Meanwhile, the imported component of PCE goods prices fell by 0.1 percent from December 2024 through May 2025. CEA’s directional findings using this method of analyzing the PCE are consistent across core goods (excluding food and energy), durables (which last for at least three years), and nondurables. The import contribution to inflation includes both the direct impact of imported final goods for consumption and indirect effects of imported intermediate inputs.

Similar analysis for the widely used Consumer Price Index (CPI) shows that imported goods have deflated 0.8 percent while overall goods prices have remained constant. There are a number of differences between PCE and CPI inflation, including scope of products included and weighting methodologies, so finding a similar pattern for CPI highlights the robustness of the results.

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