NY Fed: tariffs added 2.9 points to goods inflation, and the slow half of the bill is still arriving

Tariffs pushed up the price of everyday goods by 2.9 percentage points as of February 2026, and without them goods prices would have slipped slightly, according to a New York Fed research note by Mary Amiti, Sebastian Heise and David Weinstein. CNBC reported the headline finding on Thursday. The part the headline leaves out is the timing, and timing is what a business owner is actually exposed to.

The number behind the number

The authors estimate that for every percentage point added to the average tariff, consumer goods prices are about a quarter of a point higher after one year. Roughly two-thirds of that is direct: import prices rose almost one for one with tariffs, with about 90 percent passed through, because foreign exporters cut their own prices very little. The remaining third is indirect. U.S. factories pay more for imported parts and materials, and domestic producers face less pressure to hold prices when competing imports get dearer.

The study covers 67 non-oil goods categories. It leaves out services, about two-thirds of the consumer basket, so it says nothing about the total inflation rate. The authors also stress that their method compares goods with high and low tariff exposure and cannot capture any broader effects tariffs had on wages, demand or the dollar.

Two clocks, not one

Imported goods reprice fast. Per the note, about half of the direct effect on retail prices is in place after three months and all of it by six. The indirect effect on U.S.-made goods barely moves in the first six months, then roughly doubles over the following six. The full effect takes about a year.

That is why the Fed researchers expect the damage to linger even though tariffs came down after the Supreme Court ruling and a 10 percent surcharge replaced the earlier levies. Their projection has the tariff effect on the goods price level peaking near 3 percent in February, easing to about 2 percent by August, then edging back up. About half of that renewed rise comes from the August tariffs on Canadian goods still working through, and the rest from the announced January 2027 increase on Canadian cars, trucks and auto parts.

What it means on a shelf

The paper reports that a 10 percent rise in import and producer prices raises retail prices 5.6 percent, because distribution costs (freight, wholesaling, retail) make up about half of what a shopper pays. Take an imported item that costs a retailer $50 at the border. A 10 percent tariff passed through at the paper's 90 percent rate lifts that to $54.50, a 9 percent increase. Applying the 5.6 ratio, the shelf price rises about 5 percent, so a $100 item goes to roughly $105. That is an illustration built from the paper's estimates, not a figure the authors give for any product.

Who it actually hits

• Importing retailers felt it first and fastest. They were also the ones eligible for refunds; the Atlanta Fed survey found most firms that expect money back plan to keep some as cash.
• Shops that buy American-made goods are the group the lag catches. A hardware store or furniture seller whose suppliers build in the U.S. may see its wholesale price lists creep up through the winter, long after the tariff headlines faded.

  112,779 independent retail stores are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 14,307 in CA, 9,799 in TX, 9,064 in NY. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

• Auto repair shops face the Canadian parts increase scheduled for January.

  224,738 independent auto repair shops are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 26,287 in CA, 22,628 in TX, 14,123 in FL. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

  The auto repair playbook covers how shops handle parts-cost swings.

What to do with it

If your suppliers are domestic, ask them now what cost increases they expect to pass on, because the research says those increases build for up to a year after a tariff change. If you import directly, your pricing has probably already caught up. And if you were quoted a fixed price for a long job, check whether the materials in it are exposed to the Canadian changes. For most owners the right move is to update cost assumptions this quarter rather than wait for invoices to prove the point.

Sources: Federal Reserve Bank of New York, Liberty Street Economics (Oct 6, 2026); CNBC (Oct 8, 2026); Federal Reserve Bank of Atlanta (Sept 21, 2026); business counts from CheckThisBiz directory data. This is market information, not investment advice.