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  • Tariffs Didn’t Torch Inflation: Here’s Your Playbook for a Still-Standing Economy

Tariffs Didn’t Torch Inflation: Here’s Your Playbook for a Still-Standing Economy

Author

Noah Zelvis
November 05, 2025

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Remember April’s “This changes everything” tariff panic? Turns out, not so much. Prices are up, but not up-up.

Companies quietly rerouted supply chains, used loopholes, ate a chunk of costs, and the economy kept walking.

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Here’s a twist. After the steepest tariff wave in decades, headline inflation is ~3%, hotter than the Fed’s 2% goal, cooler than the doomsday calls. Why? Three big offsets:

1) The effective tariff is lower than the headline. Between exemptions, free-trade zones, and re-sourcing to tariff-friendlier countries, the real bill is closer to low-teens on average. That shaved the expected price shock.

2) Companies ate a lot of it. Margins ran fat post-pandemic, giving retailers and manufacturers room to swallow 30%–50% (or more) of the tariff bite rather than shove it all to consumers at once. It’s not altruism, it’s demand protection.

3) Pull-forward + smarter inventory. Firms stocked up before certain levies hit and got choosier about what they ship and store, trimming tariff paid on dust.

Net-net here means inflation’s sticky, not spiky and growth’s slower, not stopped. That doesn’t mean victory laps.

Gradual pass-through can keep prices firm into next year, and hiring has cooled enough that the Fed is flirting with more cuts, but not promising anything.

For your portfolios, plan for a soft shock (muddling growth, contained-but-not-cured inflation), not a crisis or a sugar high.

What to do with this: You don’t need to guess the next meeting. Favor businesses with pricing power, cost discipline, and balance sheets that don’t need rescuing.

Add a sleeve of names that benefit if rates drift lower and spending stays decent. Stage buys around headline swings, tariff chatter and Fed soundbites will keep serving you entry points.

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  • Buy in thirds. Now, on the next no-cut wobble, and after the next major data drop.

  • Prefer cash-flow compounding. High ROIC and steady buybacks beat heroic turnarounds in a soft-shock world.

  • Lean into value engines. Membership models, scale buyers, and off-price channels that squeeze costs when others can’t.

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Top Picks (Fresh Names, Clear Angles)

Costco (NASDAQ: COST)

When inflation annoys but doesn’t explode, scale wins.

Costco’s membership engine turns everyday value into recurring cash flow, and its buying leverage helps absorb rather than pass on every cost pop. 

That matters in a tariffy world as the warehouse club can lean on suppliers, shift mix to private label (Kirkland’s quiet superpower), and still keep baskets compelling.

As rates ease at the margin, confidence stabilizes and traffic stays sturdy; if growth wobbles, trade-down dynamics actually help. 

The model is built for soft shocks, with fees up front, razor-thin markups, high renewal rates, and relentless operational discipline.

Risks are wage and shrink pressure, or a sudden discretionary pullback, but Costco’s playbook historically out-executes both. You’re buying consistency, not fireworks.

GXO Logistics (NYSE: GXO)

Tariffs created a quieter boom in bonded warehouses, free-trade zones, and smarter inventory orchestration.

GXO sits in that plumbing, outsourced, tech-heavy logistics for brands that want to dodge delays and design around duties. 

More near-shoring and China-plus-one sourcing mean more nodes, more value-added services (kitting, returns, automation), and stickier contracts.

The beauty here is that GXO benefits whether the consumer sprints or jogs, as complexity is the client’s headache, and a service fee is the aspirin. 

As rates drift down, capex-hungry customers green-light projects shelved in tighter money, and warehouse automation (robots, vision systems) expands margins over time.

Risks are a shock demand drop or pricing pressure, but scale, vertical expertise, and multi-year deals cushion the cycle. It’s a bet on supply-chain brains, not just forklifts.

AutoZone (NYSE: AZO)

Carmakers are eating most of the tariff cost; consumers are still staring at elevated sticker prices. Result makes sense, keep the car longer. That’s AutoZone’s lane.

DIY plus a fast-growing professional business, dense distribution, and obsessive parts availability mean AZO captures the repair, not replace reflex. 

Tariffs on parts are a watch item, but the chain’s vendor relationships, private-label mix, and pricing discipline help it manage cost waves without scaring off customers.

Add relentless store productivity, hub expansions, and a legendary buyback habit that amplifies EPS compounding, and you’ve got a steady performer in a muddle-through macro.

If rates ease and used-car prices normalize, miles driven stabilize; if not, maintenance stays non-optional.

Risks here are weather and wage costs, but the category’s need-to-have beats want-to-have.

GlobalFoundries (NASDAQ: GFS)

Policy isn’t just tariffs, it’s capacity carrots too.

As the U.S. nudges chip supply toward domestic lines (think: specialty, auto, RF, power management), GFS’s good-enough, at home niche shines. 

You’re not betting on bleeding-edge GPUs, you’re owning essential, chronic-shortage parts for cars, industrial, IoT, and communications where reliability and location matter.

Multi-year take-or-pay agreements smooth revenue; incentives trim net capex pain, and a softer-landing economy supports end-market demand without overheating. 

If tariff regimes and 1:1 build-vs-import pressure stick around, customers have one more reason to anchor production stateside.

Risks to watch are customer concentration and cycle lulls, but the secular de-fragilize the supply chain story gives GFS a tailwind beyond the next Fed meeting.

Bottom Line: The tariff scare simply reshaped how the economy is working, it didn’t break everything. Inflation’s annoying, not apocalyptic. Growth’s slower, not sinking.

Own scale buyers (COST), supply-chain problem-solvers (GXO), practical resilience (AZO), and domestic-tilt enablers (GFS). 

Add in stages, keep some powder dry, and let steady cash flows, not the next headline, carry you forward.

That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.

Best Regards,
—Noah Zelvis
Macro Notes