Tariffs Still Bite
Federal Reserve research found Trump-era tariffs accounted for excess core goods inflation in 2025 on a near dollar-for-dollar basis. Separately, a U.S. trade court is weighing the legality of a proposed 10% global tariff—both developments raise the risk of higher or more volatile import costs for equipment and fit-out. (benzinga.com)(finance-commerce.com)
A new Federal Reserve note says the tariffs imposed through November 2025 raised core goods prices by 3.1% through February 2026 and added 0.8% to core Personal Consumption Expenditures inflation overall. The authors say that explains all of the excess inflation in core goods above pre-pandemic norms. (federalreserve.gov) The striking part is the pass-through. The Fed researchers say the effect built over seven months and ended up close to full dollar-for-dollar pass-through, which means import taxes showed up in store prices instead of being absorbed by suppliers or retailers. (federalreserve.gov) They measured this by looking across detailed Personal Consumption Expenditures categories and asking a simple question: did the goods hit harder by tariffs get more expensive faster. Their answer was yes, using tariff changes, import exposure, and updated 2025 global value chain tables from the Bureau of Economic Analysis. (federalreserve.gov) That matters for imported equipment, fixtures, and build-out materials because tariffs work like a sales tax added at the border. If a contractor buys lighting, elevators, furniture, or mechanical components with foreign content, the tax can keep moving through the chain until it lands in the final invoice. (federalreserve.gov) The second part of the story is legal, not economic. A three-judge panel at the United States Court of International Trade heard challenges to the April 2, 2025 tariff package after President Donald Trump used the International Emergency Economic Powers Act of 1977 to impose a 10% tariff on many countries and higher country-specific rates that reached 50%. (finance-commerce.com) The plaintiffs say that law lets a president freeze assets and block transactions, but does not explicitly authorize tariffs. The administration points to a 1971 Nixon-era emergency trade action as proof that broad emergency powers can reach import restrictions. (finance-commerce.com) Congress’s own research service says the 2025 tariff program relied mainly on two legal tools: the International Emergency Economic Powers Act and Section 232 of the Trade Expansion Act of 1962. Its January 12, 2026 timeline says the global trade-deficit tariff schedule reached 10% to 41% by country, with talks and temporary truces changing the details through late 2025. (congress.gov) The legal backdrop got even messier in February 2026. The Budget Lab at Yale says a Supreme Court ruling on February 20, 2026 vacated tariffs tied to the International Emergency Economic Powers Act, and it estimates about $165 billion in unlawfully collected duties may have to be refunded to importers. (budgetlab.yale.edu) Even with that ruling, the price effects did not vanish overnight. The same Yale tracker says the effective U.S. tariff rate reached 10.6% in January 2026 and tariff revenue was $214.7 billion above the 2022 to 2024 average as of February 2026, which shows how much cost had already been pushed into the system before the court fight was settled. (budgetlab.yale.edu) So businesses are now dealing with two kinds of uncertainty at once. One is the basic math from the Fed, which says tariffs can feed into prices almost one-for-one, and the other is the legal whiplash from courts and policy reversals, which can change who pays, when refunds arrive, and which imports get hit next. (federalreserve.gov) (budgetlab.yale.edu) (congress.gov)
