A Federal Reserve Bank of New York study found consumer goods prices would have declined slightly in 2025 and 2026 without Trump’s tariffs
Tariffs raised prices directly on imports and indirectly by making parts and materials more expensive for U.S. manufacturers
Connecticut faced added exposure through Trump’s trade war with Canada, the state’s largest foreign market
A new study recently confirmed inflation in the United States would have declined in the early days of the second Trump presidency had it not been for Trump’s tariff policies.
The Federal Reserve Bank of New York recently studied the impact of tariffs on consumer prices and found consumer good prices would have slightly declined in the second half of 2025 and most of 2026 had it not been for tariffs. Instead, once President Trump put those tariffs into play, a cost decline of 1-1.5% turned into a climb of between 1.5 and 2.5%.
“We find that for every percentage point increase in average tariffs, consumer goods prices increase by about a quarter of a percent after one year,” the Reserve’s study found.
That’s relevant as consumer inflation in the Northeast, including Connecticut, was even higher, with a core inflation rate from 2025 to 2026 of 2.9%, according to USA Facts.
About two thirds of the effect comes as tariffs increase consumer good import prices; the remaining third is the result of U.S. producers paying more for imported parts and materials in the process of making their goods. Additionally, when competing with imported products increasing in cost, domestic producers will also increase their prices to increase revenue.
In the current marketplace, should a 10% tariff be imposed on all imports, consumer goods would increase 2.6% in price after one year.
When applied to Trump’s tariffs, which were first imposed against most nations in the spring of 2025, declared illegal in winter 2026 and reimposed in different forms since then, the Fed found that American consumer goods were actually hovering at a 0% increase rate, occasionally dipping below to see prices slightly decline. By February 2026, however, tariff pressure contributed 2.9% to tariff inflation. Without tariffs, the prices of goods would have fallen in most of 2025 and 2026, even factoring in inflationary pressures from Trump’s Iran War.
With current tariff policies in place, consumer price inflation stabilized just over 2% in September 2026 and are expected to remain elevated due to Trump’s new tariffs through September 2027.
That impact could hit Connecticut harder; Trump’s current trade war with Canada exposes the state to 50% tariffs on imports and exports, and Canada is Connecticut’s largest foreign market, according to Governor Ned Lamont.
When CNBC asked the White House about the survey, the Trump regime rejected the findings, claiming “the cost of tariffs will ultimately be borne by foreign exporters who rely on access to the American economy.”
