70.5% of new tariffs were passed onto consumers

So far this year, the effect of tariffs on consumer prices has been modest — but economists say shoppers will start to feel the impact as the holiday spending season approaches.

The tariffs President Donald Trump imposed on a wide range of products and countries since April have coincided with inflation running between 2.5% and 3%, according to multiple standard price gauges.

Economists don’t anticipate a massive jump in headline inflation metrics like the Consumer Price Index (CPI) or the Personal Consumption Expenditures (PCE) index. However, they expect the tariffs to keep inflation elevated at a time when price growth would normally be easing.

“There really isn’t any debate — tariffs have pushed prices higher for consumers,” Bank of America economist Aditya Bhave wrote.

The effects have been muted up to this point because many companies stocked up on inventory before tariffs kicked in and accepted lower profit margins to avoid passing on the full cost to shoppers.

But Bank of America now predicts tariffs will add roughly 0.5 percentage points to the core PCE index — the Federal Reserve’s preferred inflation measure. With the tariffs factored in, BofA estimates core PCE would be around 2.9% in September; without them, closer to 2.4%. Fed Chair Jerome Powell referenced similar figures this week. In August, core PCE was 2.9% year over year.

Those seemingly small differences matter to the Federal Reserve, which aims to keep core inflation at 2%. The rate has been above that target since March 2021. Two regional Fed presidents — Jeffrey Schmid (Kansas City) and Lorie Logan (Dallas) — publicly disagreed with Wednesday’s decision to cut interest rates.

For households, the effect is also significant. Bhave estimates consumers are absorbing 50% to 70% of tariff costs; businesses are covering the rest.

Higher prices at checkout

In day-to-day terms, tariffs have meant higher costs for items such as coffee, furniture, and apparel. Clothing prices alone climbed 0.7% in September, per Bureau of Labor Statistics data.

Even though these goods make up small portions of inflation indexes, they are purchased frequently — which influences how people feel about inflation.

As TD Cowen analysts put it, price hikes on everyday items create a “feedback loop” at the store, shaping perceptions more than their actual statistical weight in CPI.

Artificial Christmas trees — nearly all imported from China — are one example. Cowen noted they could serve as a vivid reminder of tariff costs during the holidays.

LendingTree ran estimates showing that if these tariffs had been in place during the 2024 holiday season, consumers would have spent an additional $40.6 billion.

The firm’s data analysis suggests that 70.5% of the new tariffs in June 2025 were passed directly to shoppers.

“That means even more Americans would be relying on credit cards or personal loans to afford holiday gifts,” said Matt Schultz, chief consumer finance analyst at LendingTree.

According to the same analysis, that works out to roughly $132 per shopper in tariff-related costs.