President Donald Trump’s weekend announcement of tariffs on Mexico, Canada and China were translating into a shock for market-based inflation expectations, prompting traders to now expect an annual headline rate from the consumer-price index that’s closer to 3% for much of 2025.

Are tariffs inflationary? Who will shoulder the increased cost? Will tariffs cause a recession? How do tariffs affect different products?

Federal Reserve officials are closely watching the levies, given the expectation that such policies could lead to higher prices.

U.S. President Donald Trump's tariffs on Canada, Mexico and China have the potential to impact corporate profits, as well as to dictate the path of inflation, economic growth and stock market performance,