How fast tariffs reach consumer prices

Each percentage point added to average U.S. tariffs raises consumer goods prices by about a quarter of a percent after one year, according to new research co-authored by Professor David E. Weinstein, the Carl S. Shoup Professor of the Japanese Economy and director of the Center on Japanese Economy and Business at Columbia Business School. The paper, written with Mary Amiti and Sebastian Heise of the Federal Reserve Bank of New York, estimates how the 2025–26 tariffs moved into retail prices and was featured this month on the New York Fed’s Liberty Street Economics blog.

The key takeaway is timing. About two-thirds of the effect comes from imported goods, whose prices respond quickly. The remaining third arrives more slowly: prices of U.S.-made goods rise over six to 12 months as producers pay more for imported parts and materials and raise markups when competing imports cost more.

For alumni who set prices, manage supply chains, or invest in consumer companies, the research is a reminder that tariff costs don’t stop at the border — domestic prices can keep climbing for a year after a tariff takes effect.

Read the summary on Liberty Street Economics
Read the full research paper
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