Half of US firms still raising prices from tariffs, Fed finds

Key Takeaways

• About half of US companies are still passing tariff costs to consumers more than a year after implementation
• 37% of manufacturers and 31% of service firms plan additional price hikes within six months
• Contract restrictions and gradual pricing strategies are delaying the full tariff impact on consumers

More than a year after the Trump administration's tariffs took effect, half of American companies are still raising prices to offset import costs, and the increases will continue into 2027. That's the finding from a New York Federal Reserve survey published July 8, which paints a picture of prolonged inflationary pressure that finance teams need to factor into forecasts.

Among manufacturers that have paid tariffs directly, 37% plan to raise prices within the next six months. Another 7% say they will hike prices beyond that window. Service firms show similar patterns: 31% expect to increase prices within six months, with 16% planning later increases.

The numbers matter because they upend the assumption that tariff costs hit the economy in a single wave. They don't. The Fed's data shows pricing pressure spreading out over years, not months.

Why are companies delaying price increases?

Two factors explain the staggered hikes. First, many businesses operate under fixed-price contracts. They cannot adjust prices until those agreements expire. Second, companies are deliberately phasing in increases to avoid sticker shock. A sudden 15% jump loses customers. A series of 3% increases does not.

The Fed economists also point to policy uncertainty. With potential changes to tariff rates, new exemptions, and retaliatory measures from trading partners still on the table, firms are hedging. Small, incremental adjustments let them respond to shifting rules without overcommitting.

“Uncertainty surrounding future tariff policies may be causing some firms to adopt cautious, incremental pricing strategies rather than making large, discrete adjustments. This behavior extends the period over which tariff-related price pressures work their way through the economy.”

— New York Fed economists, July 2026

How exposed are companies to tariff costs?

The survey reveals deep exposure across sectors. Two-thirds of service firms import at least some inputs. For manufacturers, it is nearly universal. Among importers, 70% of manufacturers and 40% of service firms said they directly paid tariffs over the past 12 months.

The pass-through picture is mixed. Among tariff-paying firms, 29% of service companies and 18% of manufacturers say they have fully passed costs to customers. But 21% of service firms and 30% of manufacturers claim they have no plans for additional hikes, meaning they absorbed the costs through margin compression or efficiency gains. A small fraction, 3% of service firms and 8% of manufacturers, reported that tariffs had minimal impact on their cost structure.

Who pays the tariff bill?

The burden falls overwhelmingly on US importers. As of November 2025, American businesses paid 86% of tariff costs directly. Foreign exporters absorbed just 14%, according to earlier Fed research. This ratio contradicts claims that exporting countries bear the brunt of tariff policies.

The implication is straightforward: tariffs function as a tax on American businesses and, ultimately, American consumers. The debate over who pays is effectively settled by the data.

Larger firms are weathering tariffs better

Company size matters. A PYMNTS Intelligence report found that larger businesses have more tools to manage tariff impacts. They can raise prices with less customer attrition, drop underperforming products, and negotiate better terms with suppliers. Smaller firms lack that flexibility. They absorb costs or lose market share.

This dynamic creates a slow-motion consolidation effect. Tariffs do not hit all players equally. They favor scale.

What finance teams should model

The Fed's findings suggest that companies still forecasting a return to pre-tariff cost structures are being optimistic. Price pressures will persist through 2027 at minimum. For fintech platforms serving SMBs, this creates demand for better cash flow forecasting and margin analysis tools. For CFOs, it means building tariff variability into multi-year plans.

Contract renewal cycles deserve attention. If your suppliers locked in prices during 2024 or early 2025, expect renegotiations to carry tariff pass-through clauses. The Fed data shows this is already happening across sectors.

Frequently Asked Questions

How long will tariff-driven price increases continue?

According to the New York Fed, price hikes will stretch past 2026. Between 31-37% of firms plan additional increases within six months, with another 7-16% planning hikes beyond that window.

What percentage of tariff costs do US importers pay?

US importers pay 86% of tariff costs directly, while foreign exporters absorb only 14%, based on Fed data from November 2025.

Why are companies raising prices gradually instead of all at once?

Companies cite two main reasons: fixed-price contracts that prevent immediate adjustments, and a deliberate strategy to avoid shocking customers with sudden large increases.

Which companies are best positioned to handle tariff costs?

Larger companies have more flexibility to raise prices, drop underperforming products, and negotiate supplier terms. Smaller firms face greater margin pressure.

What share of manufacturers directly paid tariffs in the past year?

Among manufacturers that import inputs, 70% said they directly paid tariffs over the previous 12 months.

Source: PYMNTS | / PYMNTS