Photo: Kidfly182, CC BY 4.0 (https://creativecommons.org/licenses/by/4.0), via Wikimedia Commons (source)
Tariffs had added 2.9 percentage points to annual inflation in a set of consumer goods as of February 2026, and without them those goods would have gotten slightly cheaper, three economists wrote on the Federal Reserve Bank of New York's Liberty Street Economics blog on Tuesday, Oct. 6.
The authors are Mary Amiti, who heads labor and product markets research at the New York Fed; Sebastian Heise, a New York Fed research economist; and David E. Weinstein, an economics professor at Columbia University. The bank notes that views in the post are the authors' own and do not necessarily reflect those of the New York Fed or the Federal Reserve System.
A quarter of the tariff, over a year
The researchers estimate that each 1 percentage point rise in average tariffs lifts consumer goods prices by about 0.25% after one year. In a scenario with a 10% tariff on all imports, goods prices would be 2.6% higher after 12 months, they wrote.
About two-thirds of that comes directly from pricier imports. Foreign exporters cut their prices very little, so close to 90% of the tariffs reached U.S. import prices, the authors found. The other third comes from U.S.-made goods, as domestic manufacturers face higher costs for imported inputs and raise markups when rival imports cost more.
Timing differs. Import prices responded within a month, while prices of American-made goods took six to 12 months to adjust. The full effect on consumer prices takes about a year, the paper said.
The study covers 67 non-oil goods categories and leaves out services, which make up about two-thirds of the consumer basket. The researchers did not identify the 67 categories, CNBC reported. The authors said their method compares goods with more and less tariff exposure and cannot measure how tariffs affected broader forces such as exchange rates, wages or demand.
Peak has passed, prices stay higher
The tariff effect on the level of goods prices peaked near 3% in February and is forecast to ease to about 2% by August 2026, according to the post. The authors tied the easing to the Supreme Court ruling early this year that ended tariffs imposed under emergency powers, after which a lower 10% surcharge took their place.
They forecast that the tariff contribution to 12-month goods inflation falls to around zero by August 2026 and then turns negative as the large 2025 increases drop out of the comparison, and edges slightly above zero by mid-2027. Their forecast holds tariffs at end-of-September levels, apart from the higher tariffs on Canadian cars, trucks and auto parts announced for January 2027. The August 2026 tariffs on Canadian goods are still feeding through, they wrote.
President Trump has argued that companies could absorb tariff costs rather than pass them to shoppers, CNBC noted.
What's next
The forecast runs through September 2027. The Canadian auto tariff increase is scheduled for January 2027, which the authors expect to push the tariff effect on goods prices up again.
Sources
- Federal Reserve Bank of New York, Liberty Street Economics: How Fast Do Tariffs Pass Through into Consumer Prices? (2026-10-06)
- CNBC: Inflation on many everyday items was entirely due to tariffs, NY Fed says (2026-10-08)
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