U.S. businesses are signaling that consumer prices are set to rise in the coming months as President Donald Trump's new tariffs push corporate costs higher, ending a period in which companies absorbed the impact to avoid alienating customers.
The Trump administration began imposing 15% tariffs on dozens of countries earlier this month, on top of 30% levies already in place on Chinese imports. Companies initially held prices steady by stockpiling goods, but executives now warn margins are too strained to maintain that approach.
Beth Hammack, president of the Federal Reserve Bank of Cleveland, told CBS News that companies are "coming to the point where their margins are getting squeezed and they need to start passing that onto consumers."
Home Depot, which delayed price hikes by relying on pre-tariff inventories, expects "modest price movement in some categories," an executive said Tuesday. Procter & Gamble last month announced it would raise prices in August on about one-quarter of its products, citing tariffs.
The auto sector could soon follow. Former General Motors executive Warren Browne, now head of RFQ Insights, said tariffs will add roughly $2,200 per vehicle this year. "GM, Ford, Stellantis, Toyota - They can't support $2,200 per vehicle. That's impossible to sustain," Browne said, predicting sticker prices for 2026 models will rise when they hit showrooms.
Data show early signs of pressure:
- Wholesale prices rose at the fastest pace in three years last month.
- Harvard Business School's tariff tracker reported modest increases across major retailers.
- Goldman Sachs estimates consumers so far have absorbed 22% of tariff costs, but projects that share could climb to 67% if trends persist.
A LendingTree survey found that more than 30% of U.S. businesses plan to raise prices within six months, while just 5% expect cuts. Matt Schulz, the firm's chief consumer finance analyst, said, "Tariffs are likely playing a significant role in these concerns, but so is the overall sense of uncertainty that remains in the American economy."
The poll showed businesses in states including Rhode Island, New Hampshire, Montana, Washington, Oregon and Vermont were most likely to expect increases, with more than 36% of firms in each planning hikes. In states such as West Virginia and Mississippi, at least 20% of firms also anticipated price rises.
More than half of companies nationwide expect their own input costs to climb in the next six months, LendingTree reported. "Pricing pressure may force other choices, such as staffing reductions, in the hopes of remaining competitive," Schulz said.
Treasury Secretary Scott Bessent has argued that exporters and companies can continue absorbing tariffs, telling Bloomberg last week that "there are probably a lot of corporate margins that got very fat during COVID, and now we're seeing a return to a normal pre-COVID margin."
Trump has warned automakers and retailers not to pass costs onto consumers. In May, he singled out Walmart, urging it to "EAT THE TARIFFS."
