The Pizza Guy Does Not Pay for the Pizza
Economists Mary Amiti, Sebastian Heise and David Weinstein of the Federal Reserve Bank of New York asked a question every shopper should care about, which is how fast tariffs reach consumer prices (Amiti et al., 2026).
Their answer is awkward for anyone who says foreigners foot the bill. About 90% of the 2025 tariffs passed through to US import prices, and the share held near 90% even after accounting for exchange rate movements. Foreign exporters absorbed little of the cost (Amiti et al., 2026).
From the Dock to the Checkout
The pass through keeps going after the border. A one percentage point rise in average tariffs raises consumer goods prices by about 0.25% after one year. About two thirds of that comes directly from pricier imported goods, and the rest from higher prices of goods made in the United States (Amiti et al., 2026).
Retail adds its own layer. A 10% rise in import and producer prices raised retail prices by 5.6%, and distribution margins account for about half of what consumers pay. A 10% tariff on all imports would raise consumer goods prices by 2.6% after twelve months (Amiti et al., 2026).
Patience helps, but only a little. About half of the direct effect appears within three months and all of it within six, while the indirect effect more than doubles between six and twelve months, so the full effect takes about a year (Amiti et al., 2026).
The Scoreboard and the Fine Print
By February 2026, tariffs had added 2.9 percentage points to goods price inflation. Without them, goods prices would have fallen slightly. The tariff effect on the goods price level peaked near 3% in February 2026, and the authors project it easing to about 2% by August 2026 (Amiti et al., 2026).
| February 2026 (peak) | 3% |
| August 2026 (projected) | 2% |
Now the skeptical part. The study covers 67 non oil goods categories and leaves out services, which make up about two thirds of the consumer basket. The authors also note their design cannot establish how much broader price movements were themselves caused by tariffs (Amiti et al., 2026). The tariff bill rarely stays at the dock.
The tariff bill rarely stays at the dock.
What You Can Actually Do About It
Expect the full price effect of a tariff to take about a year to arrive, so plan big purchases of imported goods with that in mind. Compare prices across stores, consider refurbished or secondhand items when quality is fine, and watch how much of your budget goes to goods versus services. If you run a business, review how much of your supply depends on imported inputs. Then ask yourself, which everyday purchase would you change if you saw the tariff printed on the price tag?
References
Amiti, M., Heise, S., & Weinstein, D. E. (2026, October 6). How fast do tariffs pass through into consumer prices? Liberty Street Economics, Federal Reserve Bank of New York. https://libertystreeteconomics.newyorkfed.org/2026/10/how-fast-do-tariffs-pass-through-into-consumer-prices/
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