NY Fed Says Tariffs Are Entirely Behind Inflation on Everyday Items
NY Fed researchers found tariffs added 2.9 percentage points to consumer goods inflation by February 2026. Without them, goods prices would have fallen.
The tariff tax, quantified
Inflation on many everyday items was entirely due to tariffs, the New York Fed has said, per CNBC.
A new paper from NY Fed researchers Mary Amiti, Sebastian Heise and David Weinstein tracked 67 categories of consumer goods. They estimate tariffs added about 2.9 percentage points to consumer goods inflation by February 2026.
Their counterfactual is striking: without the tariffs, consumer goods prices would have fallen slightly, by nearly 1%.
How the costs spread
The researchers found roughly 90% of the 2025 tariffs were passed through to U.S. import prices. Tariffs eventually raised prices on domestically produced goods too, through higher input costs and reduced competitive pressure.
For every 1 percentage point increase in the average tariff, consumer goods prices rose by about 0.25% after one year. That means a 10% tariff pushes consumer goods prices roughly 2.6% higher within 12 months.
"Tariffs have a larger and more drawn-out impact on consumer prices than the direct effect alone would suggest," the authors wrote. Direct levies account for about two-thirds of the impact, with the rest coming from knock-on effects.
Who pays
Tariffs are often described as a tax paid by foreign producers. This research suggests something quite different: much of the cost ultimately lands on American businesses and consumers.
The findings land as affordability dominates the political debate four weeks before the November 3 midterms, with the cost of living the top issue for voters.
Do you want to see how to make more plays? Do you want to find gains yourself? Unusual Whales helps you find market opportunities through our market tide, historical options flow, GEX, and much, much more. Create a free account here to start conquering the market with Unusual Whales
Options market and stocks to watch
Tariff-driven inflation is the macro backdrop behind everything from Fed policy to retail margins. Import-heavy retailers sit directly in the blast radius: WMT, TGT and AMZN all face margin pressure as higher input costs collide with price-sensitive consumers.
If tariff inflation keeps the Fed hawkish, rate-sensitive sectors stay under pressure. Watch TLT for the bond market's verdict and XLP for how staples names price the squeeze.
The political angle matters too: with midterms four weeks out, any tariff rollback chatter would be a tradable catalyst for retail and import names. Follow the macro tape on the Unusual Whales news feed.
Want more market intelligence? Create your free Unusual Whales account for options flow, market tide, GEX, and the full toolkit.