New York Fed Study Finds Tariffs Added Nearly 3 Points to Goods Inflation

Tariffs imposed by the Trump administration added about 2.9 percentage points to inflation in consumer goods over the year through February 2026, and without them those prices would have dipped slightly, according to new research from the Federal Reserve Bank of New York.

The study, by New York Fed economists Mary Amiti and Sebastian Heise and Columbia University economist David Weinstein, was summarized Tuesday on the bank’s Liberty Street Economics blog. It examines 67 categories of non-oil consumer goods, weighted by how much households spend on them, and compares price changes in goods that faced heavier tariffs with those that faced lighter ones. Services, which make up about two-thirds of consumer spending, are not included.

The authors found that roughly 90 percent of the 2025 tariffs showed up in the prices American importers paid, using data through February. That finding cuts against the argument that foreign sellers would absorb most of the cost by cutting their own prices.

From there, the effect spread in two ways. About two-thirds of the increase in consumer goods prices came directly from more expensive imports. The remaining third came from domestic producers, who raised prices more slowly as their imported parts and materials got pricier and as competing foreign goods became costlier. Those indirect effects rose little in the first six months and then roughly doubled over the following six, so the full impact took about a year to reach shoppers.

As a rule of thumb, the researchers estimate that each one-point rise in the average tariff rate lifts consumer goods prices by about a quarter of a percent after a year. A 10 percent tariff on all imports would raise those prices by about 2.6 percent within 12 months, by their calculation.

By the authors’ estimate, the tariff effect on the level of goods prices peaked near 3 percent in February and has been easing since, to about 2 percent by late summer. They expect the tariffs’ contribution to year-over-year goods inflation to hover near zero or below before turning slightly positive again by mid-2027, partly because of a scheduled January increase in tariffs on Canadian autos and parts. In other words, the authors expect the inflationary push to fade but prices to stay higher than they otherwise would have been.

The researchers note limits to their method. Comparing goods with more and less tariff exposure isolates the direct price effect but cannot capture broader channels, such as changes in exchange rates, wages, demand or interest-rate policy, that could amplify or offset it.

The administration has argued that tariffs will revive American manufacturing, narrow the trade deficit and push trading partners into better deals, benefits it says outweigh short-term price effects. The study does not weigh those goals. It measures only what the tariffs have cost at the checkout so far, and for households already stretched by fuel prices, that cost has been real.