NY Fed: Tariff Price Effects Take Up to a Year

New York Fed economists said October 6 that tariff price increases take up to a year to fully reach consumer goods prices.

If you run a high-ticket store like the ones we teach at Ecommerce Paradise, that timing matters more than the tariff rate itself. Import prices react almost at once, but domestic producers reprice slowly and then speed up, so a wholesale increase you have not seen yet can still arrive from your US supplier well into 2027.

I will cover what the researchers found, the tariff stack sitting under big-ticket goods right now, the margin math for a typical high-ticket dropshipping order, and five moves to make this week.

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NY Fed Study: Tariff Price Effects Take Up to 12 Months

Mary Amiti, Sebastian Heise and David Weinstein of the Federal Reserve Bank of New York published “How Fast Do Tariffs Pass Through into Consumer Prices?” on October 6, according to the bank’s Liberty Street Economics blog. The post summarizes their research paper, Staff Report No. 1201.

Their rule of thumb: each 1-percentage-point rise in average tariffs lifts consumer goods prices about 0.25% after one year, per the post. Roughly two-thirds of that comes from higher prices on imported goods and about one-third from higher prices on US-made goods.

Timing is the news. Per the authors, tariffs pass through to US import prices at nearly 90%, and they do it immediately. Retail prices lag. About half of the direct effect shows up within three months and the full direct effect within six.

US producer prices barely move for the first six months, the authors found. Then the response roughly doubles over the next six. The staff report puts overall pass-through to consumer prices at about 26%, with the direct effect making up 64% of that and slower indirect effects the other 36%. The researchers say those indirect effects, which come from costlier imported inputs and from domestic firms raising markups when import competition eases, take nine to twelve months to spread through supply chains.

Retail adds its own layer. A 10% rise in import and producer prices raises retail prices by 5.6%, because distribution costs make up about half of what shoppers pay, according to the authors. Their scenario for a 10% tariff on all imports is a 2.6% rise in consumer goods prices after twelve months.

What the data says about 2025 and 2026

By February 2026, the 2025 and 2026 tariffs had added 2.9 percentage points to goods price inflation, per the authors. Without them, goods prices would have fallen slightly. The effect on the goods price level peaked near 3% in February and is projected to ease to about 2% by August, which the authors tie to a Supreme Court ruling and a lower replacement surcharge.

The pressure is not finished. Economists expect it to rise again as Canadian levies keep passing through and higher auto tariffs take effect next year, according to Axios. The Liberty Street forecast assumes tariffs stay at end-of-September levels, except for a scheduled January 2027 increase on Canadian autos, trucks and auto parts.

The limits the authors flag

The analysis covers 67 non-oil consumer goods categories weighted by 2022 household spending. It excludes services, which make up about two-thirds of the consumer basket, and uses data through February 2026. The authors compare goods with high tariff exposure against goods with low exposure, which isolates tariff effects but cannot show how much broader price movements were themselves caused by tariffs.

Section 301, Section 232 and the Court Fight Behind the Data

The tariff stack changed three times this year, and each change restarts the clock the New York Fed describes. The 2025 tariffs imposed under the International Emergency Economic Powers Act were struck down by the Supreme Court earlier in 2026, according to Retail Dive. A temporary 10% global surcharge under Section 122 began in February and expired July 24.

New Section 301 duties took effect the same day, July 24, per the International Home Furnishing Representatives Association. They apply to goods from 60 trading partners the administration says have failed to stop forced-labor imports. The rate is 10% on India, Indonesia, Malaysia, Cambodia, Canada and Mexico, and 12.5% on China, Vietnam, Thailand, the Philippines and most other covered countries. The EU and Taiwan are capped at 10% combined with normal tariffs, and Japan, South Korea and Switzerland at 12.5% combined.

Those duties can stack on top of normal customs duties, existing China Section 301 tariffs and any antidumping or countervailing duties, per the same report. Goods already covered by Section 232 are generally excluded. Two small businesses have sued in the US Court of International Trade, and the duties stay in force unless a court blocks them or the administration changes course.

Where furniture and home goods sit

Certain upholstered furniture, kitchen cabinets and vanities carry a 25% Section 232 tariff, according to Mohawk Global. A proclamation signed December 31, 2025 postponed the scheduled increase on those goods to January 1, 2027. The IHFRA report stresses that the exemption from the new duties is classification-specific, so it does not cover all upholstery, wood or residential furniture.

I have tracked pieces of this all year. My post on the Canada tariff that included furniture is one example. My list of 77 Chinese goods named for tariff cuts is another.

Refunds are a separate track. Phase 3 opened October 6 and only covers plaintiffs, so do not count on one for your margin math.

The counterpoint

The administration has attacked this research team before. After a February New York Fed paper found that US firms and consumers bore 94% of tariff costs in the first eight months of 2025, falling to 86% by November, National Economic Council Director Kevin Hassett told CNBC, “The paper is an embarrassment,” according to Yahoo Finance. Hassett argued the paper looked only at price changes and ignored lower inflation and higher real wages. U.S. Trade Representative Jamieson Greer acknowledged consumers pay tariffs but rejected the claim that they are regressive.

The Axios report on the October study contains no White House response.

Tariff Lag Math: What 0.25% Does to a High-Ticket Margin

My read is that the study’s real contribution is timing, not the headline number. Tariff news moves fast and your wholesale price list does not. In dropshipping you rarely import anything yourself. Your authorized-dealer supplier either imports finished goods or buys domestic components from someone who does, and the study says that second channel is the slow one that doubles its response in months six through twelve.

If I start the clock at the July 24 Section 301 date, the six-to-twelve-month window points to supplier price changes landing anywhere from late January to late July 2027. That is my inference, not a reported date. Any single supplier could move earlier, later or not at all.

Hypothetical math on one order

These figures are invented for illustration. Say you sell a $3,000 patio set with a $2,250 wholesale cost, a $750 gross margin or 25%. A supplier increase of 3% takes wholesale to $2,317.50 and margin to $682.50, or 22.75%. That is $67.50 per order. At 40 orders a month, it is $2,700 a month gone before you touch ad spend.

Now add a hypothetical $450 ad cost per sale, or 15% of the order. Your margin after ads falls from 10% to 7.75%. If your fixed costs already eat 6 to 7 points, you just lost most of your profit on a price move you did not choose.

Two scenarios and a threshold

Scenario one: your supplier makes everything in the US from domestic materials. You may see small or no increases, and the study’s one-third domestic share suggests those still arrive later than imports. Scenario two: your supplier relies on imported hardware, fabric or motors. Expect staged increases and expect them on a price sheet that looks routine.

The threshold I would set is a gross margin floor. Pick the number below which an ad-driven sale stops making sense, then reprice or pause the SKU when a supplier change pushes you under it. I would not let a single price email decide that for me, but I would never discover it three months later in the books either.

Where the big retailers have the edge

Per Retail Dive’s July 13 report on the National Retail Federation’s Global Port Tracker, importers front-loaded inventory ahead of expected tariff increases, with June container volume forecast up nearly 19% year over year. Large retailers that bought early can hold sticker prices while you pay the new wholesale number. They also soften big carts with financing, which is why I wrote about Wayfair expanding Klarna to 0% APR for six months.

Repricing carefully matters too. I covered the FTC and state scrutiny of personalized pricing, so move prices by SKU for everyone rather than by shopper. Freight is the other moving piece, and I laid out the LTL rate increase that started October 5.

One caveat on my own read. The study averages 67 consumer categories, and big-ticket furniture, outdoor and mobility goods may behave differently. One study is not a law of physics. It is a useful stress test.

If supplier repricing across a dozen SKUs sounds like a second job, it is. That recurring work is what the turnkey done-for-you service exists to take off your plate. If you already run a store and need backup suppliers onboarded, the scaling service covers that.

Tariff lag turns supplier repricing into a permanent chore. Want my team to build and run your high-ticket store for you? See the turnkey done-for-you service →

Supplier Re-Quotes and Repricing: Your Checklist This Week

Five moves, in this order:

Email every supplier today. Ask for the current price list, the date of the last change, whether any increase is tied to the July 24 Section 301 duties, and whether the minimum advertised price is moving. Get dates in writing. If you source through a feed provider, check the last catalog update date in Inventory Source. Do the same in Wholesale2b if you use it.
Build a landed-cost sheet by SKU. Columns for wholesale, freight, payment fees and ad cost per sale, then run a 3% and a 5% supplier increase. The 0.25% per point rule from the study gives you a sanity check. Pull the actual numbers from your books in Finaloop or whatever accounting tool you use.
Set a margin floor and a trigger. Write down the gross margin where you reprice and the one where you pause ads. Then update prices in the Shopify admin bulk editor. Check that your Merchant Center feed shows the same numbers, using my guide on turning Google Shopping clicks into sales.
Check foreign currency exposure. If any supplier invoices you in another currency, your cost moves with exchange rates on top of tariffs. Compare transfer costs on Wise. Price Airwallex too before you commit.
Send a price-lock email to open quote requests. A short flow in Klaviyo that tells warm leads the current price holds for a set number of days converts hesitation into a deadline. Book a free discovery call if you want a second set of eyes on your margin sheet.

Frequently Asked Questions

Does this study mean prices will keep rising?
Not necessarily. The authors project the tariff effect on the goods price level easing to about 2% by August and its contribution to twelve-month inflation falling to roughly zero. They also expect pressure to rise again with Canadian levies and higher auto tariffs, per Axios.

How much of a tariff actually reaches the shopper?
The staff report puts overall pass-through to consumer prices at about 26%. Nearly 90% reaches import prices immediately, and the rest of the chain adds delayed effects through domestic producers and retail distribution costs.

Why do US-made goods rise later than imports?
Costlier imported inputs and weaker import competition take nine to twelve months to work through supply chains, according to the researchers. If you use a supplier platform, my walkthrough of setting up Spocket is a place to start when comparing supplier options.

Are furniture imports hit by the new Section 301 duties?
It depends on classification. Goods already under Section 232, such as certain upholstered wooden furniture at 25%, are generally excluded, but the IHFRA says the exemption is classification-specific. Ask your supplier for the tariff code, and confirm with a licensed customs broker. I am not a lawyer or customs advisor.

Can I raise prices if my supplier sets a minimum advertised price?
You can usually advertise at or above the floor, but not below it. Ask the supplier to publish a new minimum before you move, so competitors and you reprice together. My list of high-ticket niches can help if you want to compare categories before you commit.

Where do I find categories and suppliers with less tariff risk?
Start with domestic manufacturers that offer authorized dealer agreements. My free niches list is a good starting point. The launch guide for a high-ticket dropshipping business is the full launch walkthrough.

Comparing supplier repricing notes with other store owners beats doing it alone. Want to work through this with them and me inside the community? Join the Skool community →

Keep an eye on supplier emails over the next few months and keep your cash buffer healthy. If you want an account built for that, I walked through opening a Mercury account. Subscribe to the YouTube channel for daily breakdowns. More breaking news coming through the day.

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Trevor Fenner

Trevor Fenner is an ecommerce entrepreneur and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.