American-made goods also got more expensive under Trump tariffs, new research finds: news

American-Made Goods Rose in Price Under Trump Tariffs, Research Shows

New economic research reveals that import tariffs implemented under Donald Trump’s administration did not just raise the prices of foreign importsthey also drove up the cost of goods produced directly within the United States.

A study from economists at the Federal Reserve Bank of New York and Columbia University found that tariffs significantly increased consumer goods price inflation, impacting both domestic factory output and retail shelves. While tariffs are often promoted to protect domestic manufacturing, economic data indicates that American-made products experienced notable price hikes through two primary economic mechanisms:

• The Marginal Cost Channel (Higher Intermediate Costs): Many domestic manufacturers depend heavily on imported raw materials, equipment, and intermediate components. Tariffs applied to items such as imported steel, aluminum, electronic components, and textiles increased the baseline cost of production for U.S. factories, forcing manufacturers to pass those added expenses on to consumers.

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• The Strategic Complementarity Channel (Reduced Price Pressure): When foreign goods become more expensive due to import duties, domestic producers face diminished market competition. With less downward competitive pressure on pricing, domestic manufacturers often raise their own prices at the factory gate, widening profit margins or offsetting broader operational inflation.

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Key Findings and Economic Takeaways

• Delayed Domestic Price Reactions: Unlike foreign import prices, which respond rapidly to new border duties, the price increases for U.S.-manufactured goods take six to twelve months to fully materialize across domestic supply chains.

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• Impact on Goods Inflation: Researchers estimated that tariffs added nearly 3 percentage points to overall goods inflation, reversing what would have otherwise been a modest reduction in everyday household costs.

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• Longer-Lasting Consumer Impact: Although direct inflationary rate spikes can stabilize over time, the absolute price levels for domestically made goods remain elevated, keeping everyday living costs higher for American consumers.

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