Economy · · 2 min read
NY Fed study finds tariffs added 2.9 points to US consumer goods prices
New York Fed researchers say tariffs lifted prices of 67 kinds of goods by 2.9 percentage points by February. Without them, those prices would have fallen.
The short answer
Researchers at the New York Fed estimate that tariffs pushed up prices for 67 categories of consumer goods by 2.9 percentage points by February 2026. Without the levies, those prices would have fallen by almost 1%. About a quarter of each tariff increase reached shoppers within a year, and the authors expect elevated prices to last into 2027.
What’s going on here?
A paper by New York Fed economists Mary Amiti, Sebastian Heise and David Weinstein measured how the 2025-26 tariffs fed into retail prices, CNBC reported on Thursday. Across 67 categories of goods, prices were 2.9 percentage points higher by February because of tariffs; without them, the same items would have become almost 1% cheaper. For every one-point rise in the average tariff rate, consumer goods prices were about 0.25% higher a year later. The researchers did not name the categories studied. A White House spokeswoman said the administration has consistently held that foreign exporters ultimately bear tariff costs.
What does this mean?
This is one of the clearest estimates yet of who pays for tariffs. A tariff is a tax on imported goods, collected when they enter the country. The question has always been how much of that tax foreign sellers absorb, how much US companies swallow in their margins, and how much ends up on shelf prices. The New York Fed team found that around 26% of last year's tariff increases had passed into consumer prices, meaning businesses along the chain absorbed much of the rest, at least for now.
The effect does not stop at imported goods. On the NY Fed's Liberty Street Economics blog, the authors explain that about two-thirds of the price impact comes directly from more expensive imports. The remaining third is indirect: US manufacturers pay more for imported parts and materials, and some raise their own prices when competing imports become costlier. Imported goods react quickly, while prices of US-made goods adjust over six to twelve months as costs work through supply chains.
That slow pass-through matters for the outlook. Annual price growth for the goods studied peaked at the start of 2026, but the researchers expect consumers to keep paying elevated prices into 2027. The legal backdrop has also shifted: the Supreme Court struck down many of the tariffs in February, triggering refunds to retailers, but the White House has pursued levies through other means, and many imports now face rates around 10%, often well below earlier levels.
For policymakers, the findings suggest that part of recent goods inflation came from trade policy rather than strong demand. Interest rates are a blunt tool against that kind of price pressure, because they work mainly by cooling spending, not by lowering the cost of imports.
The bull case
Many tariffs have since been struck down or replaced with lower rates of around 10%, and the study found price growth for the tracked goods peaked in early 2026. If the remaining pass-through fades as expected, goods inflation could cool, easing pressure on household budgets and giving retailers more room to protect margins.
The bear case
The research suggests tariff effects are larger and longer-lasting than the direct hit alone implies, with US-made goods also getting pricier. Elevated prices are expected to persist into 2027. That could keep inflation sticky, support higher interest rates for longer and squeeze both consumer spending and the margins of companies that absorbed the costs so far.
Why should I care?
For markets:
Retailers and consumer goods companies remain exposed to tariff-driven cost increases and to consumers' tolerance for higher prices. Stickier goods inflation can also keep bond yields higher.
The bigger picture:
Tariffs work like a hidden tax that shows up gradually at the checkout. For households, that means some everyday items may stay more expensive for longer than headline tariff cuts suggest.
Market impact
| Asset (ticker) | Potential direction | Timeframe | Confidence | Reason |
|---|---|---|---|---|
| Retail stocks (XRT ETF) | ↓ bearish | Long term | Low | Lingering tariff costs can squeeze retail margins or dampen shopper demand. |
| 10-year Treasury yield | ↑ bullish | Long term | Low | Persistent goods inflation can keep long-term borrowing costs elevated. |
Potential impact, not investment advice.
Frequently asked questions
How much have tariffs raised prices?
A New York Fed study found that tariffs raised prices for 67 categories of consumer goods by 2.9 percentage points by February 2026. Without the tariffs, prices for those goods would have fallen by almost 1%, according to the researchers.
Who pays for tariffs, consumers or foreign companies?
The New York Fed researchers found that about 26% of last year's tariff increases had been passed on to consumers. Businesses absorbed much of the rest, at least so far. The White House maintains that foreign exporters ultimately bear the cost.
How long do tariffs take to affect prices?
According to the New York Fed's research, imported goods prices respond quickly, while prices of US-made goods adjust over six to twelve months as higher costs for imported parts move through supply chains. The authors expect elevated prices to last into 2027.
Sources: CNBC, Liberty Street Economics (New York Fed)
