Tariffs and Your Price Tags: What the New York Fed Found, and What It Means for Buying Well

Economists at the Federal Reserve Bank of New York have put numbers on a question shoppers keep asking: how much of what we pay for goods comes from tariffs, and how long does it take to show up on a price tag? Their answer, published October 6 on the bank’s Liberty Street Economics blog and picked up by the trade press this week, is that a one-point rise in average tariffs lifts consumer goods prices by about 0.25 percent after a year.

That headline figure is useful, but the timing is where it gets practical for anyone who buys quality goods on a schedule rather than on impulse.

What the researchers found

The study, by Mary Amiti, Sebastian Heise and David Weinstein, looks at 67 non-oil consumer goods categories, weighted by 2022 household spending. Roughly two-thirds of the price effect comes through imported goods. The remaining third lands on American-made products, mostly because their producers pay more for imported inputs.

Import prices moved first and fast. Within the first month they rose almost one-for-one with tariffs, and the authors estimate that about 90 percent of the 2025 tariffs passed through into U.S. import prices, with foreign exporters absorbing very little. Domestic producers were slower. Their prices barely moved for six months, then roughly doubled their adjustment over the following six.

Retail is a third layer. Distribution margins make up about half of what a shopper pays, so a 10 percent rise in import and producer prices translates into about 5.6 percent at the register. As a scenario, the authors calculate that a uniform 10 percent tariff on all imports would raise consumer goods prices by 2.6 percent after twelve months.

The 2025 to 2026 picture

Applying the model to recent tariff levels, the researchers estimate that by February 2026 tariffs had added 2.9 percentage points to goods price inflation. Without them, they say, goods prices would have dipped slightly. The effect on the price level peaked near 3 percent that month.

Their forecast is where a careful reader should slow down. The tariff contribution to the twelve-month change falls to roughly zero by August 2026 and turns negative afterward, as the 2025 increases drop out of the year-over-year comparison. But that is a statement about the rate of change. The price level itself stays about 2 percent higher in August 2026. A cooling inflation number does not mean prices went back down. It means they stopped climbing as steeply from a higher base.

The forecast assumes tariffs stay where they stood at the end of September 2026, apart from a scheduled January 2027 increase on Canadian autos and parts. Any change in the rules would change the outlook.

What it means for people who buy well

Readers of this site tend to shop for things meant to last: a bridle leather briefcase, a good pair of shoes, a watch strap, a desk set. A few takeaways follow from the findings, labeled as general observations rather than financial advice.

• Price changes arrive in stages. Imported items can reprice within weeks, while domestically made goods tend to follow months later as input costs work through. A maker who held a price last spring may not be able to hold it this winter.
• Made-here does not mean untouched. About a third of the effect hits U.S.-made goods through the cost of imported hardware, thread, tooling and materials. Craft businesses feel it too, just on a delay.
• Lower inflation is not lower prices. If headlines say price growth is easing, the sticker you saw last year may still be the floor this year.
• Cost per use beats sticker price. When replacement costs rise, an item that lasts fifteen years instead of three looks better. Care matters too: conditioning and storing leather properly is the cheapest way to stretch a purchase.

Limits worth keeping in mind

The researchers compare goods more exposed to tariffs with those less exposed, holding economy-wide factors such as exchange rates, wages, demand and monetary policy constant. That design cannot capture broader effects that tariffs might set off through those channels. Services, about two-thirds of the average consumer basket, are excluded. The import price data run through February 2026, while tariff rates are tracked through September.

The study also covers broad categories, not briefcases or leather goods specifically, so it describes how prices behave in general rather than forecasting what any one product will cost. It is an estimate from one team of economists, and other analysts may weigh the same evidence differently.

Sources

• Federal Reserve Bank of New York, Liberty Street Economics, How Fast Do Tariffs Pass Through into Consumer Prices?
• Retail Dive, Tariffs pushed up consumer goods prices by 2.9 percentage points: NY Fed