Tariffs Drive Up Prices as Companies Pass Costs to Consumers

A new analysis from the Federal Reserve Bank of Minneapolis found that companies are starting to pass along more of their tariff costs to customers. This has contributed to higher core inflation, which excludes food and energy, coming in at 3.3 percent year-over-year.

The researchers estimated this was a 0.4 percentage points increase from what it would have been without tariffs. The analysis also looked at the impact of the AI boom on prices, with video and information processing equipment prices up 12.2 percent from July 2025 to July 2026.

At her alterations business, Skirting the Rules in Detroit Lakes, owner Nikki Caulfield is seeing some indirect effects from tariffs. While the costs of materials and supplies she buys have stayed stable, the price tags on clothing that people bring in for alterations are increasing.