There’s a growing debate in Washington and on Wall Street about whether tariffs, taxes on imports, are pushing up prices for American consumers.

Joseph Lavorgna, a key adviser in the Treasury Department, says no, tariffs are not inflationary. He believes most economists are wrong and that their warnings of price hikes due to tariffs have been exaggerated. He says any price increases would be temporary and small, not the kind of ongoing inflation that worries the Federal Reserve.

But not everyone agrees. Some experts, including Harvard professor Alberto Cavallo, say even small increases from tariffs could add up over time, especially if companies raise prices gradually instead of all at once. This could result in persistent inflation.

The data is mixed:

• Some studies show modest price increases linked to tariffs.

• Others, including a White House report, claim prices for imported goods have actually fallen recently.

Even the Federal Reserve is split on the issue:

• Some officials are pushing for rate cuts to support the economy, believing inflation from tariffs will be limited.

• Others urge caution, warning that inflation could still rise, and it’s too early to make a big policy move.

The outcome matters for everyone, from investors and businesses to consumers feeling the pinch of higher prices after the pandemic. With a U.S. election approaching, inflation and interest rates are once again front and center in the political and economic spotlight.