Survey Reveals Businesses Plan to Shift Half of Tariff Costs to Consumers

According to a recent survey by teh Federal Reserve Bank of Atlanta, businesses are gearing up to pass on about half of their tariff-related costs to consumers who are still feeling the pinch from inflation post-pandemic.

The survey highlights a shift in strategy compared to 2018 when companies transferred nearly all tariff costs directly onto customers. The researchers noted that many firms now believe their clientele is more sensitive to price changes due to recent economic pressures.

“Our findings indicate that businesses think they can’t fully transfer these cost increases without risking a drop in demand,” stated Atlanta Fed analysts Kevin Foster, Aaron Jalca, and Brent Meyer in a blog entry dated June 5.

Participants were asked how much of the increased tariff expenses they coudl realistically pass on based on current demand levels. Those experiencing robust sales anticipated passing along more costs than those with weaker performance during the survey conducted from April 7 to April 18.

This period coincided with President Trump’s implementation of tariffs—10% for most countries and as high as 25% for foreign-made vehicles and parts. Notably,China and the EU faced even steeper tariffs at that time.

On average, businesses indicated they could manage passing along about 51.1% of an increase stemming from a standard 10% tariff hike without negatively impacting demand. In scenarios where costs rose by 25%, this figure dropped slightly to around 47.3%.

the ongoing saga surrounding these tariffs has kept business owners on their toes; Trump’s administration has made various adjustments over time—extending deadlines or temporarily reducing rates while negotiations unfolded. Recently, U.S. courts added further unpredictability by both blocking and then reinstating many levies during appeals processes. This uncertainty has led Federal Reserve officials to maintain steady interest rates as they await clearer data trends.

While official statistics have yet to reflect critically important impacts from these tariffs regarding prices or employment figures—with inflation easing and job markets remaining stable—both consumers and business leaders remain apprehensive about potential repercussions on profitability.

The Fed’s Beige Book report released June 4 noted a decline in economic activity amid this uncertainty; it revealed that companies planning price hikes due to tariffs expect them within three months—with some regions anticipating “strong” increases ahead.

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