New York Fed Research Shows How Fast Tariffs Reach Store Prices: What It Means for Your Shopping Budget

A new study puts numbers on a question many shoppers have been asking: when tariffs go up, how much of the cost ends up on the price tag, and how fast?

Economists at the Federal Reserve Bank of New York published new research on Tuesday, Oct. 6, on how quickly tariffs pass through to the prices people pay for consumer goods. The findings appeared on the bank's Liberty Street Economics blog and were written by Mary Amiti, Sebastian Heise and David E. Weinstein.

First, what's a tariff?

A tariff is a tax on imported goods. It's paid by the company bringing the product into the country, not by the foreign seller. That company can absorb the cost, pass some of it on to shoppers through higher prices, or do a mix of both.

What the researchers found

Here are the main findings, according to the New York Fed:

• About a quarter of a percent per point: "For every percentage point increase in average tariffs, consumer goods prices increase by about a quarter of a percent after one year," the authors wrote.
• Imported goods move first: Import prices, what U.S. companies pay to bring goods in, rise almost one-for-one with tariffs within the first month.
• U.S.-made goods follow: Prices of goods made in the U.S. adjust more slowly, over six to 12 months, as higher costs for imported parts and materials move through supply chains.
• Two sources of higher prices: Roughly two-thirds of the effect comes from pricier imported products. About one-third comes indirectly, from U.S. products that use imported parts and from companies raising their own prices when competing imports get more expensive.

The authors also found that by February 2026, tariffs had added 2.9 percentage points to inflation for goods, according to the New York Fed and 24/7 Wall St.

Why this matters

Inflation is the rate at which prices rise over time. When tariffs push up goods prices, families feel it in everyday purchases such as clothing, toys, electronics, household supplies and appliances.

The research also helps explain why some price increases seem to show up months after a tariff is announced. Imported items can change price quickly, but the ripple effects on American-made products take longer to appear.

The findings came out the same day the government reported a record level of imports in August, a reminder of how much of what Americans buy comes from overseas.

What this means for your wallet

• Expect gradual changes: Because U.S.-made goods can take six to 12 months to adjust, prices on some items may keep creeping up even after tariff news fades.
• Plan big purchases: If you need an appliance, laptop or furniture, consider comparing prices over a few weeks and setting a firm budget before you shop.
• Shop the holidays early and with a list: With the holiday season approaching, a gift list and spending limit may help you avoid paying more than you planned.
• Look at store brands and secondhand: Store-brand products and quality used items can be ways to stretch your budget when prices rise.
• Track your categories: Reviewing a few months of spending can show you which categories are rising fastest for your family, so you can adjust where it matters most.

This article is for education only and is not financial advice. Everyone's situation is different.