Will Tariffs Raise Consumer Prices

Yes, tariffs raise consumer prices, but more slowly and by less than the headline rate suggests. Federal Reserve Board economists estimate that tariffs in place through November 2025 raised core goods prices (PCE basis) by about 3.1% and overall core PCE prices by about 0.8% through February 2026. Most of the effect arrived over five to nine months, not overnight (FEDS Notes, April 2026).

For a specific product, the price change depends on three numbers: the duty rate, the share of the retail price that is import cost, and how much of the duty the supply chain passes on. You can test those with the tariff pass-through calculator, or estimate a whole year of household spending with the household tariff basket calculator.

Why a 25% tariff doesn't mean 25% higher prices

The duty is charged on the customs value, the price the importer paid the foreign supplier. By the time a product reaches the shelf, it carries freight, warehousing, wholesale margin, retail margin, and sales tax. The import cost is often well under half of the retail price.

Worked example: an imported sofa with a $1,000 shelf price.

• The retailer's landed cost is $500, of which $350 is the customs value paid to the overseas factory.
• Suppose the sofa's line carries a 25% Section 232 tariff on upholstered wooden furniture: $350 × 25% = $87.50 in duty.
• If the full duty passes through at cost with no extra markup, the shelf price rises $87.50, or 8.75%.
• If the retailer applies its usual percentage markup to the higher cost (doubling it), the increase is $175, or 17.5%.
• If the factory, importer, and retailer together absorb half, the increase is $43.75, or 4.4%.

The same 25% tariff produces anything from a 4% to an 18% price change depending on cost structure and pricing behavior. That range is why the pass-through calculator has separate inputs for pass-through and retail markup.

What research found about 2025–2026 price increases

Several Federal Reserve studies measured the 2025 tariffs as they hit prices. They use different data and methods, so their numbers aren't directly comparable, but together they paint a consistent picture.

The March 2026 note is titled "The Slow Climb" for a reason. Year-over-year inflation on imported goods was roughly zero until April 2025. Price effects for China-origin goods were not statistically significant until about August, then built steadily through December. The April 2026 note reaches a similar conclusion from a different angle: the 2025 tariffs passed through "lower and slower" than the 2018–2019 China tariffs did.

A lesson from washing machines

The clearest single-product case comes from 2018. After tariffs on imported washing machines, washer prices rose about 12%. Dryers, which were not tariffed but are often bought together with washers, rose by about the same amount (Flaaen, Hortaçsu & Tintelnot, NBER Working Paper 25767). Tariffs can raise prices on related goods that the tariff never touches.

How tariffs show up in inflation reports

If you follow the monthly inflation numbers, it helps to know where tariffs appear and where they don't.

• Core goods inflation is the cleanest signal. It excludes food and energy, whose prices swing with commodity markets, and it covers furniture, apparel, vehicles, and household goods, where import shares are high. The Fed estimates above are framed around core goods PCE prices for this reason.
• Services inflation barely registers tariffs directly. Rent, insurance, and medical services make up most of the consumer basket, which is why a 3% rise in core goods prices translates into less than 1% on the overall core index.
• Import price indexes from the Bureau of Labor Statistics measure prices before duties. A flat import price index alongside rising shelf prices means foreign sellers are not cutting prices and the duty is being paid on the US side, consistent with the evidence summarized in who pays import tariffs.
• Timing matters. Because pass-through builds over five to nine months, the months right after a tariff change understate the eventual effect, and the months after a tariff cut can still show increases from earlier actions working their way through.

Which consumer goods are most exposed?

Exposure depends on two things: how much of the category is imported, and how high the tariff layers are. Using the site's June 2026 category data (additional tariffs only, excluding the regular HTS duty):

The highest tariff product categories page ranks all 22 categories and explains the policy behind each rate.

Will prices come down after the IEEPA ruling?

The Supreme Court ruled on February 20, 2026 that IEEPA does not authorize tariffs, and CBP stopped collecting those duties on February 24, 2026. Shoppers should not expect a matching drop in prices, for three reasons:

1. Replacement tariffs filled much of the gap. A 10% Section 122 surcharge applied from February 24 to July 24, 2026. On July 24, Section 301 duties of 10% or 12.5% took effect on imports from 60 economies. For many consumer goods the added rate fell, but it did not go to zero.
2. Refunds go to importers, not shoppers. CBP pays IEEPA refunds to the importer of record. Whether a retailer cuts prices after receiving one is a business decision. Who pays import tariffs explains how that works.
3. Prices tend to fall more slowly than they rise. Retailers that held margins down during 2025 may use lower costs to rebuild them first.

As of this update, we have not found published Federal Reserve or BLS research measuring whether retail prices fell after the February 2026 change. Treat any claim that "prices will drop X%" with caution.

How to estimate the effect on what you buy

1. Pick the item and its likely origin. Check the label or the product listing. A US-assembled product can still contain tariffed parts.
2. Estimate the import share of the price. This is the factory price as a share of the shelf price. If you don't know it, test a range such as 25% to 50% and see how much the answer moves. Branded goods with heavy marketing costs usually sit toward the low end.
3. Find the tariff rate. Use the category tariff calculator for a category average, and add the General rate if you know the HTS line.
4. Choose a pass-through assumption. The Fed estimates above range from about 26% at retail to near-full for core goods after seven months. Run 30%, 60%, and 100% to see the range.
5. Multiply: price × import share × tariff rate × pass-through.

For a $200 pair of running shoes with a 40% import share, an added 12.5% tariff, and 60% pass-through, the estimate is $200 × 0.40 × 0.125 × 0.60 = $6.00, or 3% of the price.

What households can do

• Time big purchases deliberately. Furniture and appliances priced from inventory bought before a tariff change may still carry old costs. Scheduled increases, such as the January 1, 2027 step-up on upholstered furniture and kitchen cabinets, are a known date to plan around.
• Compare origins, not just brands. Goods from Canada and Mexico entered duty-free under USMCA are exempt from the July 2026 Section 301 duty.
• Watch for related-product effects. As the dryer example shows, untariffed complements can rise too.
• Budget the total, not the headline. A 3% rise across a few thousand dollars of imported goods is real money, but it is smaller than many headlines imply.

For the mechanics behind every rate mentioned here, read how US import tariffs work.