New York Fed Finds Tariff-Driven Price Hikes Will Stretch Past 2026

• Two-thirds of service firms and nearly all manufacturers import inputs, with 40% of service firms and 70% of manufacturers directly paying tariffs over the past 12 months
• Companies cite two main reasons for delayed price increases: existing contracts that prevent immediate price changes and deliberate gradual pricing strategies to avoid customer shock
• Only 29% of service firms and 18% of manufacturers have fully passed through tariff costs to customers so far, indicating substantial future price pressures remain in the pipeline

Summary

A New York Federal Reserve survey reveals that tariff-related price increases will persist beyond 2026, more than a year after the Trump administration's initial tariff implementation. Approximately half of surveyed companies continue raising prices to offset tariff costs.

Key Findings:

Among tariff-paying service firms, 31% plan price increases within six months, with an additional 16% planning hikes beyond that timeframe. For manufacturers, 37% anticipate raising prices within six months, and 7% plan increases later.

Survey data shows 40% of service firms and 70% of manufacturers directly paid tariffs over the previous 12 months. Two-thirds of service companies and nearly all manufacturers import at least some inputs.

Price Pass-Through Status:

• 29% of service firms and 18% of manufacturers have fully passed tariff costs to customers
• 21% of service firms and 30% of manufacturers don't plan additional price hikes
• 3% of service firms and 8% of manufacturers report minimal tariff impact

Reasons for Delayed Pricing:

Companies cite two main factors: existing contracts preventing immediate price adjustments and deliberate gradual increases to avoid customer shock. Uncertainty surrounding future tariff policies, potential exemptions, and international responses encourages cautious, incremental pricing strategies.

Historical Context:

In June 2025, three-quarters of companies had passed higher costs to consumers. By November 2025, foreign exporters absorbed approximately 14% of tariff costs, with U.S. importers bearing the remainder. Larger companies demonstrated greater ability to manage tariff impacts through pricing power and product portfolio adjustments compared to smaller firms.