Inflation has accelerated to its fastest pace in years, driven in part by supply disruptions linked to the Iran war. Although fuel prices have eased in recent weeks as negotiations between the United States and Iran showed signs of progress, economists say other factors could continue pushing consumer prices higher.
A report published by the New York Federal Reserve focuses on the delayed effects of President Donald Trump’s tariffs. The findings suggest that, rather than introducing immediate price increases, many companies have chosen to spread those increases over a longer period, leaving consumers exposed to additional cost increases more than a year after the tariffs were first imposed.
Businesses Continue Adjusting Prices After Tariffs
According to the Federal Reserve Bank of New York, previous research has shown that consumers ultimately bear nearly 90 percent of the cost of tariffs. Its latest report states that, in an environment where tariff policies have frequently changed, many firms have opted to distribute price increases across extended periods instead of implementing them all at once.
The central bank’s business surveys found that 40 percent of service-sector firms and 70 percent of manufacturers reported paying tariffs directly during the past year. More than half of the companies in both groups said they had already transferred those costs to consumers or did not expect to introduce additional tariff-related price increases.
The same survey also found that 47 percent of service firms and 44 percent of manufacturing firms still plan further tariff-related price increases, either within the next six months or later. According to the New York Federal Reserve, “These results suggest that many businesses are still adjusting their prices, more than a year after tariffs were first introduced.” The report added that it remains unclear whether companies are responding to one round of tariffs or to the sequence of increases introduced over the past year or longer.
The economists also noted that some businesses may have avoided imposing immediate, large price increases to prevent “shocking” customers, while others delayed pricing decisions because of uncertainty surrounding tariff policy since early last year.
Inflation Pressures Persist Alongside Higher Energy Costs
Earlier this year, the Tax Foundation calculated that U.S. households were paying approximately $1,000 more on average because of tariffs imposed after President Trump returned to office. According to the report, many of those tariffs were struck down by the Supreme Court in February, prompting the administration to adopt other measures while a lengthy refund process began.
Even so, the economists at the New York Federal Reserve wrote that inflationary pressures generated by tariffs “may well last for some time to come.”
Those pressures come as Americans also face higher prices linked to the Iran war, which pushed oil prices and gasoline prices to multiyear highs. Fuel costs declined in recent weeks amid hopes that the conflict could end, although renewed hostilities and the collapse of the ceasefire have again raised the prospect of higher fuel prices.
Affordability Concerns Emerge as a Political Challenge
Financial pressure is also reflected in public opinion surveys. According to a recent Harris Poll conducted for The Guardian, 95 percent of Americans believe the country is experiencing an affordability crisis driven by the rising costs of groceries, gasoline and other everyday expenses. The survey found that this view is shared across Democrats, Republicans and many of President Trump’s core voting groups.
Republican strategist Brittany Martinez, executive director of the anti-Trump conservative advocacy group Principles First, told Newsweek that “Voters don’t experience the economy through campaign messaging—they experience it through their own wallets.” She added that if Americans continue feeling financial strain, political messaging alone will struggle to overcome those concerns.
Campaign consultant Matt Klink, president of Klink Campaigns, also told Newsweek that economic skepticism presents risks for the party in power because it affects working-class, rural and independent voters who expected lower prices. He said that if voters continue believing costs are rising while Washington offers explanations rather than relief, affordability could become the defining issue in the November midterm elections.
Supporters of the administration’s trade policy argue that the inflationary effects of tariffs should be weighed against broader economic objectives. Some economists who support strategic tariffs say higher import duties can encourage domestic manufacturing, strengthen supply-chain resilience and provide the United States with greater leverage during trade negotiations, even if consumer prices increase in the short term.
Republican leaders have also defended the strategy. National Republican Congressional Committee Chairman Richard Hudson said he supports President Trump’s tariff policy because he believes it “is going to benefit the American people a great deal” and ultimately help American workers and manufacturers.
