ENTARIFFS, PRICING & WORKING CAPITAL · OCTOBER 13, 2026
New York Fed Research Traces Tariff Costs Through Retail Prices
New York Fed researchers estimate that each percentage-point increase in average tariffs raises consumer-goods prices by roughly one-quarter percentage point after a year, with imported-goods effects arriving sooner than domestic cost effects.
What the October 6 research estimates
Source publication date: October 6, 2026. New York Fed researchers studied the effect of 2025–26 tariffs on retail consumer-goods prices. They estimate that every one-percentage-point increase in average tariffs raises consumer-goods prices by about one-quarter percentage point after one year. The analysis excludes services, which represent roughly two-thirds of the consumer basket, and the authors' views are not necessarily those of the New York Fed or Federal Reserve System.
- 01Import prices moved quickly
- 02Domestic effects built over 6–12 months
- 03Full consumer effect took about a year
Imported-goods effects arrived quickly
The researchers estimate that roughly 90% of the 2025 tariff increase passed through to U.S. import prices, even after accounting for exchange-rate movements. Import prices responded almost immediately. At retail, about half of the direct effect appeared after three months and essentially all by six months as higher border costs moved through distribution and pricing.
Domestic price effects took longer
Tariffs also raised costs for U.S. producers using imported parts and materials and reduced competitive pressure from higher-priced imports. Those domestic producer-price effects were small in the first six months and then built over the following six months. In the authors' 10% across-the-board tariff illustration, consumer-goods prices were estimated to be 2.6% higher after twelve months, about two-thirds from imported goods and one-third from U.S.-made goods.
Practical borrower takeaway
Create a product-level tariff map covering country of origin, customs classification, declared value, rate, timing, supplier terms, freight, inventory on hand, substitutes, customer contracts, and pricing authority. Forecast landed cost, gross margin, inventory purchases, payables, receivables, and borrowing-base eligibility month by month. Test delayed domestic-cost effects and incomplete customer pass-through, and document which assumptions are contracted, observed, or still estimates before sizing working capital.
Importers, manufacturers, distributors, and retailers should model tariff exposure by SKU and timing, then connect landed cost, pricing power, inventory, margins, and working-capital needs to the financing request.
Discuss a financing need →This independent summary is based on the cited source and is provided for general educational purposes only. Terms and program requirements may change.