Consumers haven't seen the last of tariff-induced inflation, according to a new research brief released this past week by the Federal Reserve Bank of New York. Even so, tariffs are no longer a sizable threat to prices, and their impact will diminish in coming months.

About 47% of services companies and 44% of manufacturers said they plan to pass along additional price increases resulting from already-paid tariffs, Fed researchers reported, based on findings from the New York Fed's regional business surveys.

A majority of businesses surveyed said these price increases likely would hit in the next six months. Some 16% of service-related companies and 7% of manufacturers said they expected to still be implementing tariff-related price hikes in 2027.

Higher tariffs have lifted goods prices, particularly in industries that rely on imports, since President Donald Trump's "Liberation Day" announcement of global tariffs in April 2025. The St. Louis Fed has calculated that tariffs accounted for roughly 0.5 percentage points of headline inflation and around 0.4 percentage points of core inflation from June to August 2025, as measured by the personal consumption expenditures price index.

Tariff-related price hikes are likely to be incremental from here, however, and concentrated in sectors that make up a relatively narrow portion of the inflation basket. Companies have already absorbed the majority of costs associated with higher tariffs, and levies are expected to trend lower as a result of a Feb. 26 Supreme Court ruling that struck down tariffs issued by the Trump administration under the International Emergency Economic Powers Act, or IEEPA.

"The [New York Fed] survey results only tell us about the breadth of tariff pressures to come, not the magnitude of the potential tariff price increases," says Bernard Yaros, lead U.S. economist at Oxford Economics.

The effective tariff rate currently stands at an estimated 11.8%, according to The Budget Lab at Yale University. Once Section 122 tariffs, valid for 150 days, expire later this month, and pharmaceutical tariffs start to take effect on July 31, the rate is expected to drop to 9.7%.

Meanwhile, the U.S. Customs and Border Protection is actively processing refunds for invalid tariffs levied through IEEPA, although it is unlikely that businesses will return those fees to consumers in the form of lower prices.

Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, thinks there could be more tariff-related price hikes in the pipeline, especially from smaller companies that spread out price increases to avoid losing market share. Also, many of the affected imports are intermediate goods, which means the tariff impact has taken longer to work through the supply chain, he says.

Yaros says unrealized tariffs pass-throughs are most likely to occur in the case of new vehicles and apparel. Foreign and domestic auto makers have absorbed higher tariff costs, even as the import price index for new passenger vehicles has fallen since April 2025. Apparel inflation has been strong in recent months, climbing 4.8% year over year in May.

But customs duties as a share of total imports have been "grinding lower, " Yaros adds.

Federal Reserve officials have indicated they also expect tariff inflation to fade.

New York Fed President John Williams said last month that he believed the direct effects of existing tariffs on prices appear to have "mostly played out." He doesn't expect to see much, if any increase from here.

A year ago, under former Fed Chair Jerome Powell, the central bank was keenly focused on the extent and longevity of the inflationary impact of tariffs. Now, Williams and others are most concerned about the inflationary pressures caused by AI, as data-center demand drives up prices for equipment, materials, metals, and memory chips.

Rising oil prices, too, have taken center stage, especially with the recent resumption of hostilities in Iran. Indeed, there are indications that diesel fuel prices are set to climb.

The tariff impact on inflation proved underwhelming, even if it isn't over just yet. But the AI buildout is still unfolding, and inflation measures could reflect the costs for a long time.

Write to Megan Leonhardt at megan.leonhardt@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 12, 2026 01:00 ET (05:00 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.