The Federal Reserve has released surveys and anecdotes indicating that businesses are raising prices on goods not affected by tariffs. The data suggests that companies may be using tariffs as a cover to unnecessarily increase costs.
A survey of 110 manufacturers and over 200 service firms in the New York and New Jersey area found that 90% of manufacturers import some goods, exposing them to higher tariffs. Three-quarters of these firms said they were passing on tariff increases to customers.
About half of companies reported a decrease in their bottom line due to tariffs, with some reducing headcount. A significant share of companies raised prices of unaffected goods to spread higher costs across inventory or take advantage of customer expectations.
The trend is nationwide, according to the Federal Reserve’s Beige Book, which reports widespread businesses expecting costs and prices to rise at a faster rate. The Fed noted that “higher tariff rates were putting upward pressure on costs and prices” across all 12 districts, with some companies spreading price hikes across all items.
The phenomenon has raised concerns about companies using tariffs as a cover for unnecessary price increases. However, a top Fed official stated that it is unlikely to be a significant source of additional inflation above the tariff-induced increase.
In textbook economics, higher tariffs result in higher prices. The data from the Beige Book illustrates this stark reality for America’s retailers, who are left with two options: hike consumer prices or risk a cash crunch that threatens their survival.
Source: https://www.axios.com/2025/06/04/trump-tariffs-prices