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Goods prices were on track to fall. Then the tariffs hit, and the New York Fed just put a number on what it cost you.
A new study from the Federal Reserve Bank of New York has done the math on one of the biggest questions in the economy: how much did Trump’s tariffs actually cost consumers? The answer, per economists Mary Amiti, Sebastian Heise and David E. Weinstein: tariffs added 2.9 percentage points to consumer goods inflation by February 2026. Without them, goods prices would have fallen slightly.
This isn’t a think tank with an agenda. It’s the Fed’s own researchers, and it’s one of the clearest estimates yet of how the 2025-26 tariff wave moved from policy papers to your receipt.
The number
The researchers compared consumer goods with different levels of tariff exposure while holding broader economic factors — wages, demand, exchange rates, monetary policy — constant. Goods-price inflation had been running near its slightly negative pre-pandemic average through much of 2024. Then the tariffs took effect, and prices climbed.
By February 2026, tariffs had added 2.9 percentage points to the 12-month change in consumer goods prices. Strip out the tariff effect, and the researchers concluded prices would have declined slightly. In other words: the era of falling goods prices ended because of tariffs.
How the tariff tax works
The study traces the full journey from tariff to price tag, and it’s faster than most people think. Nearly 90% of the 2025 tariffs were passed through to U.S. import prices, with import prices responding almost immediately after tariffs were imposed.
But the path from a shipping container to a store shelf has more steps. Retail prices also include transportation, wholesaling and other distribution costs. The researchers estimate that when tariff-related import and producer prices rise 10%, consumer retail prices rise about 5.6%. Overall, about one-quarter of a tariff increase ends up in consumer goods prices after a year. Their model: a broad 10% tariff eventually raises consumer goods prices by about 2.6%.
The timing matters. Imported goods respond fast — roughly half the direct effect shows up within three months, the full effect within six. Domestic goods take longer, six to 12 months, as higher costs work through supply chains.
Even “Made in America” costs more
One of the study’s most consequential findings: tariffs raise prices even when the final product never crossed a border.
U.S. manufacturers rely on imported steel, components, machinery and materials. When tariffs make those inputs more expensive, domestic production costs rise. And there’s a second effect: when imported competitors get more expensive, American companies face less pressure to keep their own prices down — so they raise them.
Together, those forces accounted for roughly one-third of the tariff-driven price increase. The tariff tax doesn’t stop at imports. It touches the whole shelf.
The Supreme Court twist
The tariff pressure didn’t keep climbing forever. The researchers estimate the effect peaked at about 3% on the goods price level in February 2026, then declined to roughly 2% by August — after the Supreme Court struck down the tariffs imposed under the administration’s emergency powers. The administration replaced them with a lower 10% surcharge under a different legal authority.
By August, the tariff contribution to the 12-month inflation rate had fallen to around zero. But here’s the catch the researchers stress: the inflation rate and the price level are different things. Even after tariffs stop adding to the annual rate, the higher prices they already created stay embedded. The tariff effect on the overall goods price level was still around 2% in August. The rate cooled. Your receipt didn’t.
More pressure is still ahead
The researchers’ forecast assumes tariffs hold at their end-of-September 2026 levels — plus one more hit: an additional increase in January 2027 on Canadian cars, trucks and auto parts. Under that scenario, the tariff contribution to goods inflation could rise again as those tariffs work through the economy.
And because domestic producers adjust prices slowly, tariffs already imposed can keep affecting prices long after the initial shock fades.
Why it matters for us
Inflation is a regressive tax, and tariffs made it worse. The New York Fed’s September Survey of Consumer Expectations found one-year inflation expectations at 3.9% — the highest since May 2023 — with people bracing for higher food, gas, rent and medical costs. Meanwhile the September jobs report showed just 29,000 jobs added and unemployment ticking up to 4.2%.
So the picture is: prices higher because of tariffs, job growth stalling, and the Fed stuck between the two. For Black households, who spend a larger share of income on goods and have less cushion to absorb price shocks, a 2.9-point tariff bump isn’t an abstract number. It’s the grocery bill, the car repair, the kids’ clothes.
