Firms Passing On Costs
- A KPMG-style survey shows more than 34% of firms are raising prices above cost to protect margins. - That price-raising is concentrated in autos, materials, and consumer goods facing tariff and input shocks. - The behavior helps explain sustained inflation in some goods categories despite policy efforts. (x.com 1) (x.com 2)
More U.S. companies are now pushing tariff costs through to shoppers instead of eating them. KPMG found 34% passed along more than half those costs in February 2026, up from 13% in May 2025. (kpmg.com) KPMG surveyed 300 U.S.-based C-suite executives at companies with at least $1 billion in annual revenue between February and March 2026. It found 55% planned additional price increases of as much as 15% within six months. (kpmg.com) (sgbonline.com) The pricing shift is heaviest in sectors with big imported parts and materials bills. KPMG said 67% of auto executives had already made significant price changes for tariffs, and 70% had raised prices across all products. (kpmg.com) Tariffs are a tax on imports, but the final bill depends on who absorbs it. The Boston Fed found small and medium-sized importers expecting tariffs to last a year or more planned pass-through rates as much as three times higher than firms that saw them as temporary. (bostonfed.org) Federal Reserve researchers have found that tariff-heavy goods categories are now showing measurable price effects. An April 8, 2026 Fed note said 2025 tariff changes led to statistically significant consumer price increases, with effects building over seven months toward full pass-through. (federalreserve.gov) That shows up most clearly in goods people finance or replace infrequently. The St. Louis Fed said in October 2025 that durable-goods prices, including vehicles, electronics and furniture, had risen noticeably even as headline personal consumption expenditures inflation moved only modestly. (stlouisfed.org) Official inflation data still look mixed because not every category moves the same way at the same time. The Bureau of Labor Statistics said March 2026 prices rose for household furnishings and operations and for new vehicles, while used cars and trucks fell. (bls.gov) Some Fed economists argue tariffs do not explain all of the goods inflation now in the data. A Minneapolis Fed note said core goods inflation reached 1.9% in January 2026, but the pattern across categories did not line up neatly enough to pin most of that overshoot on tariffs alone. (minneapolisfed.org) (bea.gov) Companies are also still under margin pressure even after raising prices. KPMG said 78% reported higher cost of goods sold, 51% faced margin declines, and 48% had postponed major investments. (kpmg.com) The result is a slower handoff from higher import taxes to store-shelf prices than many consumers notice in real time. By spring 2026, firms were still raising prices, and the Fed was still sorting out how much of the remaining goods inflation came from tariffs and how much came from something else. (kpmg.com) (federalreserve.gov)
