Nearly half of firms that paid tariffs plan additional price increases, with some expecting to raise prices six months or more in the future, according to a new survey from the New York Federal Reserve.
Some 44% of manufacturers surveyed expect to raise prices due to tariffs, along with 47% of service firms.
“While economists and policymakers often expect that price increases due to tariffs will constitute a one-time price-level adjustment, what ‘one-time’ means in practice may be a drawn-out affair, especially when the tariffs change frequently,” New York Fed economists Jaison Abel, Mary Amiti, Richard Deitz, Sebastian Heise, and Nick Montalbano wrote.
“Our business surveys suggest that, in an ever-changing tariff environment, many firms are spreading price increases across extended periods — meaning that inflationary pressures due to tariffs may well last for some time to come.”
That differs from what many Federal Reserve officials have suggested since President Trump rolled out his second-term tariff regime.
On Tuesday, New York Fed president John Williams told Fox Business that while the Fed is still seeing inflation from tariffs, he thinks it’s near the peak.
Fed Chairman Kevin Warsh said before becoming chairman last year that he believes tariffs would result in a one-time increase in prices, not prolonged inflation. Fed governor Chris Waller has also repeatedly said he believes the Fed should “look through” the economic impact of tariffs, viewing them as a temporary, one-time price increase rather than a driver of long-term inflation.
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In his second-to-last press conference in March, former Fed Chair Jay Powell said that inflation was elevated mostly because of tariffs, but that he expected tariff-driven inflation to start to come down in the middle of the year.
“The thing that’s really important that we see this year is progress on inflation through a reduction in goods inflation as the one-time effects on prices of tariffs go through the system, go through the economy,” Powell said. “That’s the main thing we’re looking for.”
But Powell also said he was not certain that tariffs would be a one-time effect, and could take up to a year to fully filter through.
“We found that coming out of COVID, that the inflation did go away, and largely for the reasons we thought it would. But it took two years longer than we thought,” he said. “And so I think we have to be humble about knowing how long it will take for tariffs to go all the way through the economy.”