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U.S. businesses are raising prices in response to new tariff costs, but the increases aren’t limited to affected imports. According to recent surveys from the Federal Reserve, many companies are hiking prices on goods that face no tariffs at all. The tactic appears to be part precaution, part profit move, and part response to customer expectations.

At least three-quarters of surveyed manufacturers and service providers said they are either fully or partially passing along tariff costs to consumers. The New York Fed reported that a “significant share” of businesses have adjusted prices across the board—regardless of whether those goods are tariffed.

Price Hikes by Anticipation, Not Necessity

Companies say they’re spreading tariff costs across their full inventory to cushion the blow. But in some cases, firms are simply capitalizing on consumer belief that prices are expected to rise. A heavy equipment supplier told the New York Fed they raised prices on non-tariffed items “to enjoy the extra margin before tariffs increased their costs.”

Other firms are using the moment to improve short-term earnings. One clothing retailer told the Boston Fed it re-tagged summer inventory with higher prices specifically to offset anticipated tariff costs. These price changes are often implemented preemptively, and in some cases, not rolled back even when tariffs are delayed or overturned.

Walmart and Target shoppers have already posted photos online of higher shelf prices for common goods. While not all price increases can be directly linked to new tariffs, the perception is fueling expectations as businesses are responding.

Price Increases: A Familiar Playbook in Uncertain Times

This isn’t a new tactic. During the first Trump administration’s trade war, prices for dryers went up despite only washing machines being tariffed. Economists at the time flagged the practice as an example of companies “taking price,” increasing prices while blaming external factors. In the inflation spikes of 2022 and 2023, the same logic applied. As long as consumers expected costs to go up, companies had more leeway to raise prices across categories. But the market conditions were different. Today, that pricing freedom may be harder to maintain.

Claudia Sahm, a former Fed economist, noted that pandemic-era inflation was supported by a strong labor market and high consumer confidence. Those cushions are missing now. In her words, “Business may find it more difficult to pass on tariff-driven costs to consumers than they did pandemic-driven ones.”

Tariff Costs: How Far Will It Go?

The Congressional Budget Office projects that new tariff policies will add 0.4 percentage points to inflation in 2025 and 2026. The increase is noticeable but smaller than the spikes seen earlier in the decade. Still, those fractions matter when pricing strategies are already aggressive.

Some within the Trump administration argue that the benefits of tariffs—reshoring production, improving wages, stabilizing supply chains—justify the cost to consumers. However, business leaders remain concerned about how long customers will tolerate broad-based markups.

Fed Governor Christopher Waller recently pushed back on the notion that businesses will exploit the moment across the board. “It doesn’t happen often because of the risk of losing market share,” he said. “While this may happen in isolated instances, I do not believe it will be a significant source of additional inflation.” That assumption is being tested now, as companies large and small test how far they can push price adjustments without triggering a consumer pullback.

Are companies right to raise prices on untariffed goods in response to tariff costs? Tell us what you think.

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