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At a rally in Vandalia, Ohio, on Oct. 3, President Donald Trump took on critics who say his tariffs drive up prices.
“We have almost no inflation, by the way,” he told the crowd, “and we’ve taken in trillions and trillions of dollars.” (1)
Three days later, economists at the Federal Reserve Bank of New York published a study measuring how fast tariffs pass through to consumer prices. Their finding: by February 2026, tariffs had added 2.9 percentage points to inflation on goods, the physical things we buy. Without them, goods prices would have fallen slightly. (2)
One caution: Don’t compare that 2.9 with the overall inflation rate of 3.4% for the 12 months through August, from the Bureau of Labor Statistics. (3)
The Fed’s number covers goods only. It leaves out services, which make up about two-thirds of what households buy. (2) And it’s from February, when the tariff effect was at its peak.
Overall inflation was 3.4% for the 12 months through August, according to the Bureau of Labor Statistics. (3) And as for Trump’s “we’ve taken in trillions and trillions,” tariff collections, while large, are measured in billions, not trillions. (4)
Here are five things to know — including one point where Trump has a case.
1. Most of a tariff lands on the importer right away
When a tariff goes up, the prices U.S. importers pay rise “almost one for one” in the very first month, the researchers found. (2) In plain English: The foreign seller is barely eating any of the tax. The American company bringing the goods in is.
That company then passes part of the cost to you. The study found that for every 1-point increase in average tariffs, consumer goods prices rise by about a quarter of a percent after a year. (2)
Put another way, a 10% tariff on all imports would leave consumer goods prices about 2.6% higher after 12 months, by the study’s estimate. (2)
2. Made-in-America goods get more expensive, too
This part is easy to miss. Tariffs don’t just raise the price of imported stuff. They raise the price of things made here, because American factories buy imported parts and materials.
The researchers’ own example: A tariff on steel makes it more expensive to build a car in the U.S. (2) About a third of the total price effect came from U.S.-made goods, and those prices take six to 12 months to adjust. (2)
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3. Trump has a point: The tariff hit is fading
To be fair to the president, the study doesn’t say tariff inflation is getting worse. It says the opposite.
The tariff effect on the goods price level peaked near 3% in February 2026. The researchers forecast it easing to about 2% by August 2026, with tariffs’ contribution to goods inflation falling to around zero. (2)
Part of the reason: a U.S. Supreme Court ruling ended the tariffs imposed under emergency powers, and a lower 10% surcharge replaced them. (2)
The government’s own numbers fit that picture. Prices for goods other than food and energy were up just 0.7% over the 12 months through August. (3)
But “fading” isn’t the same as “almost no inflation.” Fading means the tariff boost is shrinking, not that prices are back where they started. And the study left out services, which make up about two-thirds of what households buy. (2) Overall inflation is still 3.4%. (3)
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4. “Trillions” is off by a mile
Trump said we’ve “taken in trillions and trillions of dollars.” (1) The federal government collected $194.9 billion from tariffs in fiscal 2025, according to USAFacts, and about $167.3 billion in fiscal 2026 through August. (4)
That’s about $362 billion over nearly two years. Real money, but not even half of one trillion.
And remember what the study found: Importers absorb the tariff up front, then pass a share on to the rest of us.
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5. More tariffs are still on the way
The researchers point to an announced January 2027 tariff increase on Canadian cars, trucks and auto parts. (2) Based on their findings, the full effect of a tariff takes about a year to show up in prices. (2)
If you’re planning to buy a vehicle, or anything else big that’s built with imported parts, keep that timeline in mind. Prices on imports tend to move first. U.S.-made goods follow over six to 12 months.
Here’s a rough way to think about it — my illustration, not the study’s: If your household spends $10,000 a year on the kinds of goods the Fed tracked, a price effect of about 2% to 3% works out to roughly $200 to $300 a year.
My take
The New York Fed economists stress that their views are their own, not the bank’s. (2) Fair enough. But their math lines up with the oldest rule in my profession: The person who pays a tax isn’t always the person it’s aimed at.
Trump has a point that the tariff squeeze is easing. But he’s wrong that tariffs don’t raise prices, and wrong about the trillions.
My advice: Don’t wait for prices to drop back. Budget for the prices you see today, fix what you can before you replace it, and give any big purchase built with imported parts a little extra room in the budget.
A tariff doesn’t show up on your receipt. That doesn’t mean you didn’t pay it.
Sources: 1. Roll Call Factba.se; 2. Federal Reserve Bank of New York, Liberty Street Economics; 3. Bureau of Labor Statistics; 4. USAFacts
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