New York Fed: tariff costs pass through to consumer prices, mostly within a year

Economists Mary Amiti, Sebastian Heise and David Weinstein published a note on how fast tariffs reach consumer prices. They compared price changes across 67 non-oil consumer goods categories with different tariff exposure. They controlled for exchange rates and monetary policy. The data run through February 2026.

They find that each percentage point of extra average tariff raises consumer goods prices by about 0.25% after one year. About two-thirds of this is a direct effect: import prices rise almost one-for-one with the tariff, and this is nearly complete within a month. The other third is indirect. US-made goods get dearer as input costs rise and as competition from imports weakens. This second part builds over 6 to 12 months. From import and producer prices to the shop shelf, pass-through averages about 50%.

For value research, this is a clear case of cost shifting. A charge set at the border does not stay with the first payer. It moves down the chain, and each step takes some of it and passes on the rest. Consumers end up with a large share of the burden, and domestic firms gain pricing room as a side effect. The timing matters too: some shifts are immediate and others slow.

There are limits. The study covers goods only, not services, which are about two-thirds of consumer spending. So it does not give a full measure of inflation or of who loses overall.