Prices on dozens of everyday products would have actually fallen over the past year if not for President Donald Trump's tariffs, according to new Federal Reserve Bank of New York research that puts hard numbers behind a debate economists have been having since 2025. Researchers at the New York Fed found that tariffs imposed in 2025 and early 2026 pushed inflation on 67 categories of goods up by 2.9 percentage points, and that without those levies, prices for the same products would have declined by almost 1% instead of climbing.
As reported by CNBC, the New York Fed economists who evaluated the 67 goods categories found that annual price growth in those tracked items peaked at the start of 2026. The researchers, Mary Amiti, Sebastian Heise, and David Weinstein, wrote that tariffs have a larger and more drawn-out impact on consumer prices than the direct effect alone would suggest, a finding that helps explain why sticker shock has persisted well after the initial tariff announcements faded from headlines.
A Quarter-Point Hit That Keeps Compounding
The research found that the average tariff increased consumer goods prices by roughly a quarter of a percent a year after it took effect, with about two-thirds of that impact coming directly from the levies themselves. The rest was driven by knock-on effects, including U.S. companies relying on imported parts and materials whose own costs rose. Tariff increases in 2025 ended up showing up in higher prices for around 26% of those increases, according to the same CNBC report.
A separate New York Fed study released in October lays out why the pain lingers: tariff pass-through into U.S. import prices is almost immediate, hitting a 90.5% rate, while pass-through into domestic goods prices takes 9 to 12 months to fully build as imported input costs rise and U.S. manufacturers raise their own markups amid reduced foreign competition. According to TradingView, the tariff-driven increase on consumer goods price levels peaked at nearly 3 percentage points in February before easing to around 2 percentage points by August as earlier tariff rates came down — though researchers emphasized that absolute price levels will stay elevated into 2027 even as the annual growth rate slows.
Businesses Are Still Planning More Price Hikes
That slow-building pressure is backed up by what businesses themselves are telling the Fed. A July regional business survey found that 47% of service firms and 44% of manufacturing firms paying tariffs planned to raise customer prices on varying timelines, with some increases planned within six months and others more than six months out, per Northwestern Mutual's account of the survey. Many of those businesses said they had been absorbing the initial cost shocks under fixed customer contracts before rolling out delayed, trickle-up price increases now reaching store shelves.
Those building price pressures are feeding directly into how ordinary Americans see their own financial futures. The New York Fed's Survey of Consumer Expectations, released in October, showed that public one-year-ahead inflation expectations jumped to 3.9% in September, the highest level since May 2023, according to Investing.com. Households downgraded their views of current and future finances, while separately reporting expected future increases in gas, food, rent, medical care, and college costs.
Trump Argued Companies Would Absorb the Costs
President Trump had argued that companies could absorb increased tariff costs rather than pass them along to shoppers as price hikes, a position the CNBC report notes was central to the administration's defense of the policy. White House economic advisor Kevin Hassett pushed back on earlier New York Fed tariff research in February, arguing the Fed economists focused too narrowly on price changes while ignoring consumer product substitution and what he described as a $1,400 increase in real American wages, according to the California Globe. The White House maintained that foreign exporters, rather than American shoppers, would ultimately bear tariff costs.
That administration argument runs up against the central finding of the broader body of Fed research: that American businesses and consumers, not foreign exporters, have absorbed roughly 90% of the tariffs' financial burden. The tension between the executive branch's framing and the institutional economic data has shaped much of the public debate over tariff policy throughout 2026.
Court Fight Reshaped, But Didn't End, the Tariffs
The legal landscape around these tariffs shifted dramatically in February, when the Supreme Court struck down many of Trump's tariffs.
That ruling resulted in billions of dollars in refunds flowing back to retailers, but the Center for American Progress found those refunds are going to corporate importers rather than directly to the consumers who paid the original higher prices. Customs and Border Protection launched its Consolidated Administration and Processing of Entries portal to process those importer refund claims, and retailers that had passed the original duty costs onto shoppers are now simply retaining the federal payouts, as Hoodline detailed in its earlier coverage of tariff rebate checks for Michigan families.
Rather than abandon the policy, the White House vowed to push forward with levies through alternative measures, with many imports facing tariffs of about 10%, down from an earlier tariff round that had levies significantly higher in many cases.
The Fed's Rate Decision Reflects the Same Pressures
The persistence of tariff-driven inflation has already shaped monetary policy. On September 16, the Federal Reserve raised its benchmark interest rate target by 25 basis points to 3.75%–4.00%, its first rate hike in three years, as Hoodline reported at the time. Persistent inflation remained a concern, alongside pressures from tariffs, energy prices, and technology investment.
Consumers are expected to pay elevated prices into 2027 as a result of the tariff policy, according to the New York Fed report cited by CNBC. For now, the combination of sticky retail prices, refunds flowing to corporations instead of shoppers, and a Fed still wary of cutting rates suggests the everyday cost of groceries and household goods tied to this fight is likely to stay elevated for some time yet.
