Companies plan more tariff-linked price hikes

Many U.S. companies expect to raise prices further to cover tariff costs, according to a Wednesday post from the Federal Reserve Bank of New York. The finding signals that import taxes tied to President Donald Trump’s trade policy may keep feeding into consumer prices over time.

The New York Fed cited recent regional business surveys showing that 47% of service firms plan additional tariff-related price increases. Of those service companies, 31% expect to raise prices within six months, according to the bank.

Manufacturers gave similar answers. The New York Fed said 44% of manufacturers plan to lift prices because of tariffs, including 37% that expect to do so in the next six months.

New York Fed economists said tariff-driven price changes often are described as a one-time adjustment, but the timing can stretch out when the tariff rules keep shifting. They said companies are still responding both to the levies themselves and to uncertainty over where policy goes next.

Why the increases are taking time

The New York Fed pointed to two main reasons that price increases are still in the pipeline. Some firms have fixed-price contracts that delayed their ability to charge customers more, leaving them to absorb higher costs until those agreements ended.

Other companies are raising prices gradually, according to the New York Fed. The bank described that approach as a “trickle up” strategy, in which businesses recover tariff costs over time while trying to avoid a sharp jump that could turn off customers.

The New York Fed said that approach also gives firms room to speed up price increases if tariff rates rise again. The bank’s analysis suggests the effect on consumers can arrive in stages rather than all at once.

Fortune reported that McCormick & Company may be one example of a company using a staggered approach. In a recent earnings presentation, CEO Brendan Foley described the spice maker’s price increases, including one last September and another in February, as “surgical,” and said those actions, along with $31 million in tariff refunds, helped widen gross profit margins last quarter.

Tariff policy remains in flux

Fortune reported that the administration has tried to rebuild broad import taxes after the Supreme Court struck down tariffs Trump imposed under the International Emergency Economic Powers Act. Those IEEPA tariffs had generated $166 billion in revenue, according to Fortune.

The administration has pursued other legal paths, including temporary levies under Section 122 of the 1974 Trade Act and tariffs under Section 301, which applies to countries with trade practices deemed unreasonable or discriminatory, Fortune reported. On Tuesday, the U.S. Trade Representative began a three-day hearing on whether 60 countries investigated in March failed to stop exports of goods made with forced labor, according to Fortune.

New York Fed data previously showed that U.S. importers bore most of the tariff burden, Fortune reported. American companies and consumers paid nearly 90% of the tariffs last year, according to that reporting, despite Trump’s assertions that exporters would pay the added costs.

Consumers are already feeling it

The Federal Reserve Bank of Dallas found in a May study that year-over-year core inflation reached 3.2% in March, the highest level in three years, and attributed the increase to rising tariff costs. Dallas Fed economists estimated that inflation would have been about 0.8 percentage points lower without the levies, near 2.3%.

The Tax Foundation projected in February that tariffs would cost Americans $700 per household in 2026. The group also estimated that the levies produced an average tax increase of $1,000 per household in 2025.

Separate Federal Reserve research published in April said tariff costs can take months to reach shoppers as companies try to protect profit margins and use steps such as stockpiling goods. The Fed authors wrote that when retailers’ acquisition cost for an item rises by $1 because of tariffs, they charge $1 more for that item seven months later.

This story draws on original reporting from Fortune.