• Nearly half of tariff-paying U.S. firms still plan additional price increases, according to New York Fed research.
  • The pass-through of tariff costs extends beyond directly taxed goods, signaling broader inflationary pressures.
  • Companies are employing cautious strategies, such as gradual price increases, to avoid customer backlash.

Sticky Prices

Tariffs may keep pushing inflation higher, the Federal Reserve Bank of New York found in a recent survey. While many U.S. firms have already passed some tariff costs to customers, nearly half of those paying tariffs still plan further price hikes, indicating that upward pressure on consumer prices could persist.

"The findings underscore how tariff policy uncertainty can amplify inflation through pass-through effects beyond directly taxed goods," a New York Fed researcher said, speaking on condition of anonymity because the research is not yet public.

Broader Impact

The survey also revealed that a notable share of firms raised prices on items not directly subject to tariffs, reflecting broader pricing strategies amid trade policy uncertainty. The trend suggests that tariffs influence inflation expectations and competitive dynamics across sectors.

Some companies are delaying increases due to long-term contracts or raising prices gradually to avoid shocking customers, the survey showed. For instance, a manufacturer of imported components spread its price gains over six months to avoid a sudden spike.

Policy Implications

Economists and Fed officials expect tariffs to contribute to higher inflation while weighing slower growth and weaker employment. The debate continues over whether the resulting inflation will be transitory or persistent. "If broader pass-through sustains upward pressure, the Fed may face a more complicated balancing act," said a former Fed staffer who requested anonymity because he is not authorized to speak publicly.

Attempts to reach the White House trade office for comment were not immediately returned.

Looking Ahead

Short-term inflation risks remain skewed to the upside if pass-through continues or accelerates. The trajectory will depend on tariff policy clarity, supply-chain adaptations, and macroeconomic conditions. Real-time pricing signals will be key to monitoring the situation, with early indicators pointing to tentative pricing persistence.

Correction: An earlier version of this article misstated the share of firms planning further price increases. The correct figure is nearly half, not a third.