NY Fed: Nearly Half of Businesses Still Plan to Pass On Tariff Costs
Alina Collins
A New York Fed survey finds nearly half of firms that have absorbed tariff costs still plan further price increases, some stretching beyond six months — this means tariff-driven inflation pressure is far from peaking, and the Fed's room to cut rates this year may narrow further.
Nearly half still raising prices — where is tariff pass-through now?
The NY Fed surveyed firms across New York, Connecticut, parts of New Jersey, Puerto Rico, and the U.S. Virgin Islands.
Among firms already bearing tariff costs, nearly half plan additional price hikes; roughly a third expect increases within six months, while others have mapped out longer timelines.
This means → the tariff hit to consumer prices is not a one-off shock but a rolling relay of increases — price pressure will persist for months.
Why haven't some firms raised prices yet?
One reason: existing contracts lock in pricing until renewal, delaying any adjustment.
Another: some firms are using a "gradual pass-through" strategy — small, staggered hikes to avoid sticker shock for customers.
In plain terms = they are not holding prices — they are queuing up increases. Each contract renewal triggers the next round, and the full cost lands eventually.
A Fed official says "near peak" — does the survey agree?
NY Fed President John Williams said Tuesday that the price impact of tariffs is "close to its peak."
Yet the firm-level survey shows the pass-through process is far from over — a large pipeline of hikes is still waiting to land.
This reflects a timing gap between macro-level judgment and micro-level behavior: aggregate data may show an inflection, but firms are still rolling out increases.
What does sticky inflation mean for the Fed?
Inflation had already drifted above the Fed's 2% target due to pandemic-era factors; tariff policy has extended that overshoot.
Researchers flag that renewed Middle East tensions could push energy prices higher, adding another inflation risk.
This means → if inflation stays elevated, hawks inside the Fed gain stronger grounds to argue for rate hikes this year — and rate-cut expectations get pushed further out.
How politically sensitive is this report?
The NY Fed was previously criticized by the Trump administration for concluding that most tariff costs fall on U.S. consumers, not foreign producers.
This report is carefully worded and does not extrapolate regional findings to national trends.
This reflects a research division walking a tightrope between presenting data honestly and avoiding political friction.
Content is for reference only, not financial advice.