Nearly half of firms that paid tariffs plan additional price increases, with some expecting to raise prices six months or more in the future, according to a new survey from the New York Federal Reserve. <\/p>\n
Some 44% of manufacturers surveyed expect to raise prices due to tariffs, along with 47% of service firms. <\/p>\n
“While economists and policymakers often expect that price increases due to tariffs will constitute a one-time price-level adjustment, what ‘one-time’ means in practice may be a drawn-out affair, especially when the tariffs change frequently,” New York Fed economists Jaison Abel, Mary Amiti, Richard Deitz, Sebastian Heise, and Nick Montalbano wrote. <\/p>\n
“Our business surveys suggest that, in an ever-changing tariff environment, many firms are spreading price increases across extended periods \u2014 meaning that inflationary pressures due to tariffs may well last for some time to come.” <\/p>\n
That differs from what many Federal Reserve officials have suggested since President Trump rolled out his second-term tariff regime. <\/p>\n
On Tuesday, New York Fed president John Williams told Fox Business that while the Fed is still seeing inflation from tariffs, he thinks it’s near the peak. <\/p>\n
Fed Chairman Kevin Warsh said before becoming chairman last year that he believes tariffs would result in a one-time increase in prices, not prolonged inflation. Fed governor Chris Waller has also repeatedly said he believes the Fed should “look through” the economic impact of tariffs, viewing them as a temporary, one-time price increase rather than a driver of long-term inflation. <\/p>\n
Read more:\u00a0How the Fed rate decision affects your bank accounts, loans, credit cards, and investments<\/a> <\/p>\n In his second-to-last press conference in March, former Fed Chair Jay Powell said that inflation was elevated mostly because of tariffs, but that he expected tariff-driven inflation to start to come down in the middle of the year. <\/p>\n “The thing that’s really important that we see this year is progress on inflation through a reduction in goods inflation as the one-time effects on prices of tariffs go through the system, go through the economy,” Powell said. “That’s the main thing we’re looking for.” <\/p>\n But Powell also said he was not certain that tariffs would be a one-time effect, and could take up to a year to fully filter through. <\/p>\n “We found that coming out of COVID, that the inflation did go away, and largely for the reasons we thought it would. But it took two years longer than we thought,” he said. “And so I think we have to be humble about knowing how long it will take for tariffs to go all the way through the economy.” <\/p>\n In a speech in May, Boston Fed president Susan Collins said her staff estimated that much of the pass-through of tariffs into total inflation, perhaps about 70%, had already taken place. She noted the estimates indicated that tariff pass-through to consumer prices had also stabilized. <\/p>\n The New York Fed researchers wrote that price adjustments have been gradual, in line with a growing body of research showing that tariffs pass through to consumer prices incrementally, building over months rather than all at once. <\/p>\n Research from the New York Fed in February found that nearly 90% of the economic burden from tariffs has fallen on US businesses and consumers. <\/p>\n The results suggest that many businesses are still adjusting their prices, more than a year after tariffs were first introduced. It is not clear whether firms are responding to a single round of tariffs or to the sequence of increases that has unfolded over the past year. <\/p>\n Minutes from the Fed’s policy meeting in June<\/a>, released Wednesday, revealed that almost all officials would hike interest rates if inflation remains elevated due to strong demand for AI, the Middle East conflict, or the effects of tariffs. <\/p>\n Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms<\/a> and on Instagram<\/a>. <\/p>\n Click here for the latest economic news and indicators to help inform your investing decisions<\/a> <\/p>\n Read the latest financial and business news from Yahoo Finance<\/a> <\/p>\n