New York Federal Reserve economists have quantified the cost of the Trump administration's tariff agenda: 67 commonly purchased products cost 2.9 percent more as of February 2026 than they would have under pre-duty pricing, according to a newly released white paper that matched retail prices against consumer spending data from 2022.

The counterfactual matters for sourcing teams. Without the duties, the Fed economists surmised, prices on those same goods would have fallen by roughly 1 percent early this year. Consumer goods inflation had returned to a slightly negative pre-Covid-19 average through 2024, before new duties took effect. Price increases then tracked the tariff schedule throughout 2025.

In aggregate, the paper found only about 26 percent of the tariff increases enacted last year showed up in retail prices paid by consumers — the measured passthrough rate.

What is the passthrough formula?

The paper's headline mechanic: for every percentage point increase in average tariffs, consumer goods prices rise by roughly one-quarter of 1 percent after a year.

"Roughly two-thirds of the effect arises because tariffs raise the prices of imported consumer goods," the economists wrote.

The remaining third is indirect — and harder for standard passthrough models to capture. The white paper's explanation goes directly to domestic manufacturers' cost base:

• "Tariffs raise the prices of goods made at home, not just the imports they tax — an effect that standard passthrough estimates largely miss"
• "Producers pay more for imported parts and materials"
• Producers "raise their markups when competing imports cost more"

That finding undercuts the administration's stated aim of building a domestic manufacturing base to replace offshore imports. US producers relying on imported components — a structural feature of apparel, textile and softgoods supply chains — absorbed input cost increases and, in some cases, widened margins behind higher import prices.

How long do indirect effects take to reach retail?

Timing is the operationally critical finding. Direct tariff impacts hit import prices in real time. The indirect effect takes nine to 12 months to work through supply chains.

"As a result, tariffs have a larger and more drawn-out impact on consumer prices than the direct effect alone would suggest," the paper said.

For buyers and vendors pricing autumn/winter 2026 and spring 2027 programs, that lag means cost pressure negotiated today may not fully surface at retail until late in the cycle — and any new duties imposed now carry a tail of input-cost effects into next year.

Did the effect peak?

Partly, according to the economists. The tariff effect on consumer goods prices had likely reached its peak, but average price levels will stay elevated rather than revert.

The effect eased to about 2 percent in August, down from 3 percent in February. The Fed researchers attribute that to the Supreme Court's first-quarter decision invalidating the president's "reciprocal" tariffs and the federal government's refund distributions to brands and retailers — a direct cash recovery for importers of record that had paid the invalidated duties.

The relief looks short-lived. Moving into the fall, "the tariff effect on the price level edges up again," the economists wrote. Two drivers:

• New 50 percent tariffs covering more than $20 billion in Canadian goods, including clothing and textiles
• Early industry reactions to the scheduled January 2027 tariff hike on Canadian autos

What does this force sourcing teams to decide?

The paper leaves softgoods importers with three quantified pressure points. First, the Canadian duty line now directly hits clothing and textile categories at 50 percent — a re-costing trigger for any program sourcing from Canada or using Canadian inputs. Second, the nine-to-12-month indirect lag means current landed-cost models built on direct passthrough alone understate forward pricing by up to a third of the total tariff effect. Third, the refund precedent from the reciprocal-tariff ruling argues for tracking litigation outcomes and filing refund claims where duties fall — a compliance function, not just a legal one.

Sourcing decisions that assume the August easing held will misprice spring 2027.