If these large-scale tariff policies are truly implemented, they will indeed push up inflation in the short term— but there is an easily overlooked point: tariffs are essentially a tax increase on import costs, and ultimately the bill is paid by American businesses, channels, and consumers.

The transmission of pressure may seem simple, but in reality, it occurs in stages. At around 10% tariff rates, companies can still barely absorb the impact—by compressing profits, delaying price hikes, adjusting supply chains, and shifting production locations. Data may only show a moderate increase in core commodity inflation. But what about a 25% tariff? That’s no longer a minor adjustment; many industries would be pushed directly into raising prices. Especially categories that are hard to substitute, have strong bargaining power, and rigid user demand—price signals will be directly transmitted, easily triggering secondary inflation—this is precisely the scenario the Federal Reserve fears most.

The tariff transmission chain is as follows: first, it raises import prices and PPI (producer side), then gradually enters core goods CPI and PCE (consumer side) through inventory adjustments and pricing, and finally impacts services like maintenance, insurance, and healthcare.

Europe’s export structure to the US mainly consists of high value-added manufacturing and key intermediate goods, with several industry lines being particularly sensitive:

**Automotive supply chain** (Germany, UK, France, Sweden, etc. as major exporters): Price increases for complete vehicles are only superficial; the deeper impact comes from rising component costs. Once component costs rise, domestic assembly, maintenance, insurance, and used car transactions in the US will also increase—effectively transforming the impact on goods into service inflation.

**Pharmaceuticals and medical devices** (Denmark, Germany, France, the Netherlands, etc.): Demand in this sector is the most rigid, with few substitutes, and cost pressures are especially prone to penetrating to the end-user, leaving little room for negotiation.