Fed researchers see a ‘full pass-through’ of Trump’s tariff costs to consumers, adding almost a full percentage point to inflation

The debate about who actually pays for tariffs has simmered in boardrooms and at kitchen tables across America. A little over a year into President Donald Trump’s tariff regime, a number of studies are now determining that U.S. consumers have been its biggest financier. The burden of tariff costs have gone from international trade partners, to U.S. corporations, to the average American shopper. But despite Trump’s repeated claims to the contrary, by virtually all metrics, companies are no longer absorbing tariff costs, leaving consumers most on the hook. Tariffs are now subject to a “full pass-through” from collection-driven prices to consumer-facing inflation, according to a study by researchers at the Federal Reserve Bank of Dallas, published last week. That means companies are no longer covering the tariff cost by paying duties at the border, but have now fully transferred those costs to the public in the form of higher prices for goods and services. The authors found tariffs have already had a measurable impact on inflation, specifically core inflation, which excludes volatile food and energy prices. Year-over-year core inflation hit 3.2% in March, the highest level recorded since 2023, a surge largely attributable to tariff costs, according to the Fed researchers. They estimated core inflation would have been 0.80 percentage points lower in March absent tariffs, coming in at a much more manageable 2.3%. The Dallas Fed’s report isn’t the first to calculate the consumer cost of tariffs, but its methodology helps validate similar findings. Instead of analyzing tariff rates as announced by the Trump administration, the authors focused on so-called realized rates, or the amount of duties that have actually been collected on goods and services coming into the country. Earlier projections of tariff costs were primarily forecasts based on political announcements and fact sheets, which do not always neatly lay the path for how consumers will be impacted. Firms may delay