WASHINGTON (Reuters) - U.S. consumer prices likely increased marginally in March, but inflation risks are tilted to the upside after President Donald Trump doubled down on tariffs on imported Chinese goods even as he lowered duties on other nations.

The report from the Labor Department on Thursday will likely capture only a fraction of the first wave of Trump's barrage of import duties, including a 20% tariff on Chinese goods, and levies on steel and aluminum. Trump sees tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining U.S. industrial base.

"The March CPI data will feel dated, but should shed some light on how the changing trade environment was already beginning to affect pricing," said Sarah House, a senior economist at Wells Fargo.

The consumer price index likely edged up 0.1% last month, a Reuters survey of economists showed, reflecting lower energy costs and the fading effects of beginning-of-the-year price hikes. The CPI gained 0.2% in February.

In the 12 months through March, the CPI is forecast to have advanced 2.6% after rising 2.8% in February.

Trump on Wednesday said he would temporarily lower new tariffs on many countries to a 10% rate, less than 24 hours after steep new duties kicked in and plunged financial markets into turmoil.

But Trump jacked up duties on Chinese merchandise to 125% from 104% after Beijing hit back with an 84% tariff on U.S. goods. The European Union also retaliated with duties of its own, but the trading bloc was not mentioned in Trump's statement.

"Our working assumption now will be that, cowed by the market response, Trump will repeatedly extend the 'pause' meaning that this will end up looking a lot like the 10% universal tariff that he campaigned on," said Paul Ashworth, chief North America economist at Capital Economics. "We assume U.S. inflation will now peak at 4% or so."

Minutes of the U.S. central bank's March 18-19 meeting published on Wednesday showed policymakers were nearly unanimous that the economy faced risks of simultaneously higher inflation and slower growth.

They noted "participants judged that inflation was likely to be boosted this year by the effects of higher tariffs," and "their contacts were already reporting increases in costs, possibly in anticipation of rising tariffs."

Financial markets expect the Fed to resume cutting interest rates in June having paused its easing cycle in January to give officials time to assess the economic impact of the White House's policies. The Fed's policy rate is currently in the 4.25%-4.50% range.

Excluding the volatile food and energy components, CPI was forecast increasing 0.3% in March after climbing 0.2% in February. The so-called core CPI inflation likely advanced 3.0% year-on-year in March after rising 3.1% in February.

Higher goods prices were not expected to spill over to services as a softening labor market puts a lid on wage gains. Goods inflation was, however, seen offsetting the anticipated services disinflation.