Q: If tariffs haven’t caused inflation yet for consumer packaged goods and e-commerce, does that mean they won’t cause inflation in the future?

A: Not necessarily. What we’re seeing is delayed inflation rather than absent inflation in the consumer goods sector. E-commerce businesses and CPG brands initially absorbed tariff costs through margin compression, but many are now beginning to pass costs to consumers as those margin pressures become unsustainable. Additionally, geographic diversification to lower-tariff countries has reduced average tariff rates below headline numbers for consumer packaged goods manufacturing, but this doesn’t eliminate the cost increase—it just moderates it. Expect gradual price increases on consumer products over the next 6-12 months as e-commerce businesses adjust pricing strategies. However, the bigger concern may not be inflation itself but rather rising unemployment as consumer goods manufacturers proactively contract operations in anticipation of softer demand.

Q: How long does it take to shift consumer packaged goods manufacturing from China to countries like Vietnam or Indonesia?

A: Establishing new manufacturing relationships for consumer goods typically takes 6-18 months depending on product complexity, quality requirements, and supply chain logistics. This includes factory vetting, sample production, quality audits, and logistics setup for CPG products. Many e-commerce businesses and consumer packaged goods brands began this diversification process during the first round of tariffs and are now seeing the benefits in terms of lower average tariff exposure. However, it’s not a complete solution—Southeast Asian manufacturing capacity for consumer goods has limits, and not all consumer products can be easily relocated.

Q: What does the declining ISM Purchasing Managers Index and rising unemployment tell us about tariff impacts on consumer goods and e-commerce?

A: The ISM index falling below 50 indicates manufacturing contraction, while unemployment rising to 4.60% suggests labor market softening in the consumer goods sector. Together, these indicators suggest that consumer packaged goods manufacturers are responding to rising input costs from tariffs by proactively cutting production capacity and workforce in anticipation of demand softening when they eventually raise prices on consumer products. This represents a form of economic adjustment that doesn’t show up in consumer inflation metrics but has significant implications for economic growth and employment in the consumer goods and e-commerce sectors. It’s essentially anticipated demand destruction rather than price inflation—manufacturers are right-sizing their operations now rather than waiting for reduced demand to force their hand later.

Home > Cfo Blog > Fractional CFO > Why Tariff Increases Haven’t Shown Up in Inflation—Yet: A CFO’s Real-World Perspective on E-Commerce and Consumer Packaged Goods

Why Tariff Increases Haven’t Shown Up in Inflation—Yet: A CFO’s Real-World Perspective on E-Commerce and Consumer Packaged Goods

January 8, 2026

in Fractional CFO, #FractionalCFO, CFO Services, Finance, Inflation, Tariff Impact, All Posts

Last year, when tariffs were introduced, I wrote a blog article about how they represented a critical kitchen table issue for many small American businesses that have built their business models around contract manufacturing in China and selling through U.S. retail channels—often their own web properties or Amazon—directly to American consumers. This represents a significant portion of the consumer packaged goods (CPG) market and e-commerce landscape. The e-commerce industry has flourished over the last three decades, with many consumers now using e-commerce as their primary product acquisition channel for discretionary spending on consumer goods. E-commerce businesses have been enabled by massive upgrades in technology capabilities to stand up and manage online stores with remarkable efficiency.

Today, on January 6th, The Wall Street Journal published an article examining why the increases in tariffs are not showing up in inflation data. In my article from last year, I pointed to a couple of the reasons implied in this WSJ piece. But from working directly with CPG brands and e-commerce clients navigating these challenges, I’ve observed additional factors at play that provide important real-world context. I’d like to share those insights in this blog post.

## TL;DR

Tariff increases haven’t appeared in inflation data yet for reasons the WSJ article discusses:

E-commerce businesses and CPG brands are absorbing costs through margin compression rather than passing them to consumers—though this is starting to change in recent months, suggesting delayed rather than absent inflation
Consumer goods manufacturers have shifted production to lower-tariff countries like Vietnam and Indonesia, reducing the average tariff rate below headline expectations

For more on this topic, read our fractional CFO guide to scaling from $5M to $100M and fractional CFO framework for headcount planning.

Salvatore Tirabassi Founder and Managing Director

Salvatore Tirabassi is a financial operations expert specializing in the intersection of corporate finance and emerging technologies. With extensive experience advising CFOs and finance leaders on operational efficiency, he focuses on how artificial intelligence and automation can transform traditional financial workflows. Salvatore's work centers on helping finance teams leverage technology to reduce administrative burden and elevate strategic decision-making in board communications and financial reporting. Over two decads spanning venture capital (Partner, M/C Partners, ~$2.4B AUM) and operating CFO roles. $500M+ in capital raised, 12 successful exits. Brings a dual investor-operator perspective to fractional and interim CFO work for founder-led and family-owned companies ($3M–$100M revenue).

See Full Bio

Why Tariff Increases Haven’t Shown Up in Inflation—Yet: A CFO’s Real-World Perspective on E-Commerce and Consumer Packaged Goods

Related Wiki Articles