Domestic goods account for about a third of tariff inflation effects
The New York Federal Reserve published a study Thursday finding that President Donald Trump’s tariffs raised consumer prices by about 2.9 percentage points through February — and that goods made in the United States account for roughly a third of the inflationary effect, not just imports.
The study was released weeks before the November 3 midterm elections. It arrives after consumer prices cooled in August and follows a February 20 U.S. Supreme Court ruling that found many of the tariffs unlawful — a 6-3 decision holding that Trump went beyond his authority to impose tariffs during peacetime. Eight days later, on Feb. 28, Trump launched military strikes on Iran.
The 2.9-percentage-point impact is based on a sample of 67 categories of consumer goods. Without the tariffs imposed last year and this year, those prices would have been about 1% lower, the researchers wrote. The study did not identify which 67 categories were included in its sample.
The researchers found that about a quarter of the price increases from tariffs have been passed on to consumers. Despite the tariffs being placed on imports, goods made in the United States “account for about a third” of the inflationary effects — though those effects take longer to show up in domestic goods. “So the full effect of a tariff takes about a year to appear,” the study reads.
The study was authored by New York Fed researchers Mary Amiti, Sebastian Heise and David Weinstein. “Tariffs have a larger and more drawn-out impact on consumer prices than the direct effect alone would suggest,” they wrote.
While the effects of the tariffs have eased since many were overturned, the New York Fed expects prices to remain elevated because of tariffs into next year.