New York Fed flags tariff-driven price hikes

The Federal Reserve Bank of New York said on July 8 that U.S. businesses are still not finished passing tariff costs on to customers. In a Liberty Street Economics post, the bank said nearly half of firms that had paid tariffs still planned additional price increases to offset those costs, with some expecting to keep raising prices six months or more into the future. (libertystreeteconomics.newyorkfed.org) The New York Fed’s findings add detail to a pricing story that has become more complicated in recent weeks. (libertystreeteconomics.newyorkfed.org) President Donald Trump said companies that do not build in the United States could face tariffs ranging from 25% to 200%, according to Yahoo Finance, while oil prices jumped more than 4% on July 8 after Trump said the Iran ceasefire was over and threatened further action. (finance.yahoo.com) Those developments matter because they point to two cost pressures at once: import taxes and energy. The New York Fed said the tariff pass-through it measured was still working its way through company pricing decisions, not ending with the first round of increases. (libertystreeteconomics.newyorkfed.org) ### What exactly did the New York Fed find? The New York Fed said nearly half of firms that had already paid tariffs still expected to raise prices further. The figures cited in coverage of the survey were 47% of service firms and 44% of manufacturers. The July 8 post said some firms expected those increases to continue for six months or longer. (finance.yahoo.com) Reuters reported that many Mid-Atlantic businesses were not done raising prices because of Trump’s import-tax increases, based on the New York Fed research. ### Why are firms still talking about more price increases? Tariffs raise the cost of imported goods and inputs, and the New York Fed said firms were still deciding how much of that increase to absorb and how much to pass on. (libertystreeteconomics.newyorkfed.org) Earlier New York Fed work found that most businesses passed on at least some tariff-related cost increases, with about 45% of service firms and nearly a third of manufacturers fully passing along all such costs by raising prices. Yahoo Finance said the bank’s new findings showed companies were still adjusting prices because of levies and uncertainty around them. That leaves room for later rounds of price changes rather than a single immediate increase. (libertystreeteconomics.newyorkfed.org) ### How do Trump’s latest tariff warnings fit in? Trump said on July 8 that companies that do not manufacture in the United States could face tariffs of 25% to 200%, depending on the product, according to Yahoo Finance. That warning came as his administration continued to frame tariffs as a tool to push production back into the United States. The New York Fed survey did not assess that new warning directly, but it showed firms were already planning further price increases from tariffs they had paid. (libertystreeteconomics.newyorkfed.org) That makes the survey a measure of pass-through already in motion, not a forecast tied only to future tariff threats. (finance.yahoo.com) ### Why does the oil move matter here? Oil prices rose more than 4% on July 8 after Trump declared the Iran ceasefire over and threatened to bomb Iran again, CNBC reported. The Times of India said oil jumped nearly 5% as global stock markets fell on fears that renewed fighting could disrupt energy supplies. Higher energy prices can add another layer of cost pressure for transport, manufacturing and services. (finance.yahoo.com) The overlap between tariff-related price plans and an oil spike gives companies another reason to emphasize efficiency and returns when they make spending decisions. That link between uncertainty and tighter ROI demands was described in the source briefing and is consistent with the cost pressures reported in contemporaneous coverage. (libertystreeteconomics.newyorkfed.org) ### What should readers watch next? The next signals will come from company pricing decisions, White House tariff announcements and energy markets. The New York Fed said some firms expected tariff-related price increases to continue for at least six months, while Trump’s July 8 tariff comments and the same day’s oil jump left both trade and input costs in focus. (cnbc.com) (libertystreeteconomics.newyorkfed.org) (finance.yahoo.com)