The Federal Reserve’s Beige Book report reveals that businesses dealing with President Donald Trump’s tariffs are looking for ways to pass increasing costs onto consumers. The report, which covers 12 districts and comes out every seven weeks, characterized economic growth as “little changed” from the previous report but noted that uncertainty around international trade policy was pervasive.
Firms have received notices from suppliers about rising costs resulting from tariffs and are exploring ways not to absorb these increases while passing them along to customers. Many companies expect elevated input cost growth due to tariffs and have already started adding tariff surcharges or shortening pricing horizons to account for uncertain trade policy.
The report highlights price rises in various sectors, including food, insurance, and construction materials, particularly in the New York area. Manufacturers and distributors are adding surcharges due to shipments. However, there are also concerns about margin compression amid increased costs, especially in consumer-facing firms.
Additionally, the report notes signs of problems in the trade dispute with Canada, including a decline in hotel bookings and lost business contacts for one tech firm. The outlook for service sector firms has worsened noticeably, with contacts anticipating a sharp decline in activity in the coming months.
The employment picture is mixed, with overall “little changed” but some federal government workers laid off or put on administrative leave due to spending cuts. Businesses in the Washington, D.C. region are also impacted by these changes. The report highlights difficulties faced by service organizations dependent on government support since the White House began culling through agencies that receive federal aid.
Overall, the Beige Book report underscores the challenges faced by US businesses as a result of President Trump’s tariffs and the uncertain international trade policy landscape.
Source: https://www.cnbc.com/2025/04/23/business-already-are-trying-to-pass-tariff-cost-onto-customers-fed-report-says.html