Forex

Companies Pass Through Half of Tariff Costs to Consumers

Guavy AI Editorial Team Published September 17, 2026

Instruments

USD

Researchers at the Federal Reserve Bank of New York have studied how tariffs affect consumer prices. They found that when tariffs are imposed, companies pass through a significant portion of these costs to consumers. The study looked at data from 1992 to 2018 and found that in the first two years after a tariff is implemented, nearly half of the tariff's cost is passed on to consumers.

The researchers analyzed data from various countries and industries, including the US, China, Japan, Germany, France, Italy, Mexico, Canada, and Korea. They used econometric models to estimate the impact of tariffs on consumer prices.

According to the study, in the first year after a tariff is implemented, companies pass through about 30-40% of the tariff's cost to consumers. This number increases to around 50-60% in the second year.

Companies Pass Through Half of Tariff Costs to Consumers

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