Businesses are already passing the cost of tariffs onto consumers, Federal Reserve survey finds
A new survey by the Federal Reserve reveals President Donald Trump’s sweeping tariffs are already costing consumers.
Businesses across the U.S. are reporting rising costs “related to tariffs,” particularly when it comes to buying raw materials, according to the report released Wednesday.
As a result, several businesses across different industries have “passed on at least a portion of cost increases to their consumers,” the report said.
Some business owners have held off on price hikes because consumers are growing more sensitive but, as a result, they’re suffering lower profits, according to the report.
The Federal Reserve acts as the country’s central bank with responsibilities that include setting interest rates and regulating markets. Eight times a year, the Fed surveys economic conditions in the U.S.
Consumer prices across the country are expected to rise more rapidly by late summer, the Fed predicts.
The prices of imported goods “have actually fallen this year despite President Trump’s historic tariffs,” White House spokesperson Kush Desai said, citing a recent report from the Council of Economic Advisors.
“The Administration has consistently maintained that the cost of tariffs will be borne by foreign exporters who rely on access to the American economy, the world’s biggest and best consumer market,” Desai told The Independent.
These price hikes follow months of warnings from economists that Trump’s widespread tariffs would hurt American consumers.
The JPMorganChase Institute estimates that Trump’s tariffs could add $82.3 billion in total new costs to all mid-sized U.S. companies, according to a report released July 2. Their report found that retailers may pass these rising tariff costs on to their consumers.
The investment bank Goldman Sachs similarly projects that U.S. companies will pass on 60 percent of their tariff costs to consumers.
Trump implemented a flurry of tariffs on April 2, dubbed “Liberation Day”. This included a general 10 percent tariff on all goods exported to the U.S.
Trump also implemented higher reciprocal tariffs against specific countries, but has since paused most of those levies until August 1 as his administration continues trade negotiations. However, some tariffs targeting China and specific goods are still in effect, such as a 25 percent tariff on many cars and a 17 percent tariff on tomatoes from Mexico.
Trump has threatened several countries with high tariffs as the negotiations continue. Last week, the Trump administration sent letters announcing tariffs effective August 1 against some the country’s closest allies, including Mexico, Canada, and the European Union.
