Pass 34% tariff costs to consumers
- KPMG said on March 30 that U.S. companies are pushing tariff costs onto shoppers, with 34% now passing through most of those costs. - The clearest number is what comes next: 55% of executives expect more price hikes, and many say increases could reach 15%. - That matters because tariffs are no longer a temporary margin hit — they are getting baked into normal pricing.
Tariffs are no longer just a boardroom problem. They are showing up in the prices consumers actually see — and companies are getting more explicit about that. The new signal came from KPMG’s March 30, 2026 tariff survey, which found a clear shift over the past year: fewer businesses are eating the cost themselves, and more are sending it downstream to customers. ### What changed? The big change is the pass-through rate. KPMG says the share of organizations passing more than half of tariff-related costs to customers rose from 13% in May 2025 to 34% in February 2026. That is not a rounding error. It is a move from “we’ll absorb this for now” to “this is the new price.” ### Why does 34% matter? (kpmg.com) Because it captures behavior, not just sentiment. A lot of tariff stories get stuck at forecasts. This one shows companies have already changed pricing. KPMG’s survey deck also shows businesses increasingly raising prices beyond the directly tariff-hit products, which suggests the response is spreading through broader pricing strategy rather than staying neatly tied to one SKU or category. (kpmg.com) ### What are companies saying comes next? More increases. KPMG found 55% of executives plan to raise prices again within six months, with hikes of up to 15%. At the same time, 78% reported higher cost of goods sold, and 51% said margins were already down. Basically, the first phase was absorbing the shock. The second phase is repricing. (kpmg.com) ### Is this just one survey? No — and that is why the story lands. The Federal Reserve published work on April 8 showing that 2025 tariffs produced statistically significant increases in more tariff-exposed consumer goods prices, and that the pass-through builds over time. Its estimate says tariffs implemented through November 2025 raised core goods PCE prices by 3.1% through February 2026, with pass-through looking effectively complete. (kpmg.com) ### Are other economists seeing the same thing? Broadly, yes. The Budget Lab at Yale estimated that imported core goods and durable-goods prices both rose during 2025, with implied tariff pass-through ranging from roughly 46% to 86% for core goods and 51% to 115% for durables, depending on method. The exact number moves around, but the direction is the same — tariffs are not staying trapped on company income statements. (federalreserve.gov) ### Why aren’t companies just absorbing the hit? Because the rest of the business is already under strain. KPMG’s survey says 82% of companies reported declining foreign sales and 61% reported declining domestic sales, while many also delayed investments. When sales soften and input costs rise at the same time, margins get squeezed from both sides. Passing costs on stops looking optional. (budgetlab.yale.edu) ### Does this mean every tariff becomes a higher shelf price? Not instantly, and not one-for-one in every category. Pass-through happens with a lag, and companies use a mix of tactics — smaller package sizes, selective increases, supplier pressure, sourcing shifts. But the newer evidence points in one direction: over time, a lot of those costs do reach consumers. The catch is that the path is messy even when the destination is pretty clear. (kpmg.com) ### Bottom line The useful update here is not that tariffs can raise prices. Everyone already knew that in theory. The update is that major U.S. businesses are now saying, in plain numbers, that they are doing it — and that more increases are still coming. (kpmg.com) (federalreserve.gov)
