
U.S. companies are raising prices on goods unaffected by tariffs, using trade tensions as cover to boost profits and fueling consumer inflation.
At a Glance
- A significant share of businesses hiked prices on non-tariffed goods
- One-third of manufacturers and 45% of service firms passed on all tariff costs
- Over half of firms raised prices within one month of added costs
- Roughly 50% of businesses reported lower profits due to tariffs
- Companies adjusted sourcing and inventory to offset tariff impact
Strategic Pricing Amid Trade Shocks
As U.S. trade tensions escalate, a recent survey by the Federal Reserve Bank of New York reveals that many American companies are raising prices not only on goods affected by tariffs—but also on products completely untouched by them. This pricing behavior appears designed to take advantage of public expectations around inflation and confusion over trade policy impacts.
In the survey, nearly one-third of manufacturers and 45% of service-sector firms reported passing the full burden of tariffs to consumers. But crucially, a substantial share of firms admitted raising prices on unrelated items, indicating that some are leveraging tariff news to justify broader hikes.
The pricing reaction was swift: more than half of surveyed firms adjusted prices within a month of incurring higher costs, with many doing so within days. These results suggest companies are moving quickly to protect margins or even expand them under the guise of tariff fallout.
Watch a report: Businesses Hike Prices Amid Tariff Uncertainty.
Operational Shifts and Economic Risks
In addition to price hikes, firms are restructuring their operations. According to the New York Fed’s findings, many companies are now sourcing more goods domestically or from countries outside the tariff scope. Inventory levels have also been adjusted, with businesses stocking up in anticipation of prolonged trade disruptions.
About 50% of firms surveyed acknowledged negative effects on their bottom lines due to tariffs, with some citing reductions in workforce and delays in capital spending. A broader economic slowdown may be underway, as reflected in the Federal Reserve’s Beige Book, which reports declining activity in half of the Fed’s twelve districts.
Economists are warning that this trend could push inflation higher. The Congressional Budget Office recently estimated that tariffs will add 0.4 percentage points to inflation in both 2025 and 2026. This presents a serious dilemma for the Federal Reserve, which may need to consider rate adjustments even as economic growth softens.
Finally, a PYMNTS report emphasizes that businesses are not simply reacting to tariffs—they are strategically exploiting them to recalibrate pricing across their product lines.