What impact have 2025 tariffs had on consumer prices and which sectors show the biggest pass‑through?
Executive summary
Estimates converge on a clear conclusion: 2025 tariffs have meaningfully pushed up consumer prices, but by how much and how quickly varies sharply across studies — short‑run headline effects cluster around a 1.1–1.3 percent lift in consumer price levels under full pass‑through assumptions [1] [2], while empirical retail trackers and microdata show partial and gradual pass‑through that so far ranges from roughly 20 percent to the 60–80 percent band depending on methodology and product scope [3] [4]. The biggest pass‑through and price spikes are concentrated in metal‑intensive goods, motor vehicles, apparel/leather, and some consumer electronics categories, with important caveats about timing, imported input shares, and possible foreign price responses [1] [2] [5].
1. The headline: how much have tariffs raised consumer prices so far?
Model‑based exercises that assume full pass‑through imply short‑run consumer price increases in the low single digits — The Budget Lab at Yale puts the short‑run impact at about 1.2–1.3 percent on consumer prices if tariffs are fully reflected in final prices [2] [1] — but high‑frequency retail microdata and store‑level trackers find a much more gradual realization: NBER and HBS pricing‑lab studies estimate a retail pass‑through closer to 20 percent with a cumulative 0.7 percentage‑point contribution to the all‑items CPI by September 2025 [3] [6], and the St. Louis Fed likewise documents statistically significant but incomplete pass‑through in real time [7].
2. Why estimates differ: timing, scope and who carries the cost
Differences reflect three methodological choices: whether analyses assume immediate, full pass‑through or measure realized retail prices; whether they include prices of domestic goods made with imported inputs; and how long a horizon is examined — short‑run retail prices are muted because firms draw on old inventories and may absorb costs, while input‑linkages and later markups can boost pass‑through over time [4] [8] [9]. Survey and model work show firms expecting longer‑lasting tariffs plan to pass on more of the cost, meaning pass‑through can rise as policy persistence becomes clearer [10].
3. Which sectors show the biggest pass‑through today?
Tariff exposure maps closely to product import shares and metal intensity: Yale’s sectoral accounting finds particularly large short‑run hits for metals and metal‑intensive goods and calculates motor vehicle prices rising by double‑digit percentages in the short run (an estimated ~13% for new cars in one scenario), while leather, apparel and textiles face very large short‑run increases (e.g., 28–29% for apparel and leather in some TBL scenarios) and consumer electronics and electoral equipment also show outsized effects in the short run [1] [2]. Microdata studies concur that imported goods rose faster than domestic ones, concentrating inflationary pressure in tradable consumer goods categories [3].
4. The dynamics — slow‑rolling pass‑through, variety loss and foreign response
High‑frequency pricing shows a “slow‑rolling” pattern: immediate, partial price hikes followed by gradual accumulation as inventories turn over and retailers adjust assortments; some goods disappear from shelves instead of being repriced, which reduces variety and can mask welfare losses not captured in headline inflation [8]. The Congressional Budget Office and others also document some foreign incidence — exporters trimming prices slightly — which mutes but does not eliminate domestic price effects (CBO projects exporters cut prices by about 5% of tariff increases) [5].
5. The policy implications and open uncertainties
Macro forecasts and Fed‑style event studies warn that persistent tariffs can add to core inflation and complicate monetary policy: estimates of pass‑through used in policy scenarios range from 40–80 percent in private and think‑tank work [11] [4], while central‑bank and Fed notes stress that only a portion of the predicted effect has materialized and that pass‑through will depend on duration, exemptions, and business pricing behavior [7] [12]. Key uncertainties remain: the ultimate foreign incidence, the degree to which domestic producers use imported inputs (raising indirect pass‑through), and how firms’ expectations about permanence will change pricing over 2026 [4] [10] [5].