The Pipeline Is Still Full
For most of 2025, many importers absorbed tariff costs quietly — trimming margins, drawing down pre-tariff inventory, and hoping trade policy would stabilize. That strategy bought time, but research published this summer by Federal Reserve economists confirms what many supply chain professionals already sense: the bill has not been paid in full, and more of it is still moving down the chain toward the shelf. Understanding how tariff costs actually travel from the port to the point of sale — and how long that journey takes — is now one of the most operationally important questions a U.S. importer can answer.
What the Research Actually Shows
A July 2026 analysis published by the Federal Reserve Bank of New York found that nearly 90 percent of the economic burden of tariffs has fallen on U.S. firms and consumers. That is not a political argument — it reflects the basic mechanics of how tariffs work: tariffs are taxes paid to the federal government by the importer of a foreign good when the good crosses the border, and although tariffs are paid by the business that makes the purchase abroad, who ultimately bears the cost can vary depending on the characteristics of the market for each imported good.
A key insight from a 2026 NBER working paper by researchers at the Federal Reserve Bank of New York is that tariffs raise the prices of goods made at home, not just the imports they tax — an effect that standard pass-through estimates largely miss. The study found that the direct effect accounts for 64 percent of the increase, as tariffs raise the consumer prices of foreign varieties of a good, while the remaining 36 percent arises indirectly — tariffs raise the cost of imported inputs used by U.S. producers, and domestic producers raise their markups because they face less competition from higher-priced imports.
The Seven-Month Lag That Changes Everything
Perhaps the most important finding for importers doing forward planning is how long pass-through actually takes. Separate Federal Reserve research found that the full effect of tariffs can take time to manifest in consumer prices — seven months, to be exact — with firms tending to preserve consistent profit margins despite changes to tariff policies. That means a tariff increase implemented today is unlikely to fully appear on retail shelves until well into next year.
The New York Fed's July 2026 Liberty Street Economics post makes clear that the pipeline is still under pressure. Forty-seven percent of service firms and 44 percent of manufacturers that paid tariffs directly said they have more tariff-induced price increases to come, and among tariff-paying service firms, roughly 30 percent plan additional cost increases within the next six months, as do nearly 40 percent of tariff-paying manufacturers. Furthermore, these results suggest that many businesses are still adjusting their prices, more than a year after tariffs were first introduced.
Why Businesses Delay — And What That Delay Costs
The reasons firms do not pass costs through immediately are structural, not just strategic. The New York Fed identified two primary explanations. First, some businesses operate under contracts with fixed selling prices and are unable to raise prices until such contracts expire, forcing them to absorb cost increases in the meantime, and research has found that long-term contracts can impede businesses from passing through cost increases. Second, some businesses reported taking a "trickle up" approach to price increases, where they gradually raise prices over time rather than immediately raising prices to fully cover tariffs — a pricing strategy that allows firms to avoid shocking their customers with sharp price increases while retaining the ability to accelerate price increases if input costs continue to rise.
The result for many small and mid-sized importers is compressed margins rather than clean pass-through in either direction. Survey data from Netstock's 2026 Tariff Impact Report found that the move from cost absorption at 44 percent in 2025 to cost pass-through at 82 percent in 2026 is a notable pricing shift that customers across the supply chain may increasingly see this year. Yet even that shift does not fully resolve margin pressure: tariff costs are not simply being absorbed or passed through in full but are settling into a gray zone where businesses bear some of the burden while pushing the rest downstream, with the result being thinner margins on both sides of the transaction.
Who Pays More at the Shelf — and Why It Is Not Equal
Pass-through does not fall evenly across product categories or income groups. Research tracking retail price data found that within product categories, cheaper varieties saw the highest increases in prices, with the prices of the cheapest product varieties rising at an average of 5 percent between October 2024 and September 2025, about double the rate of premium products, likely because less expensive products tend to have small margins, and retailers therefore have smaller scope to absorb the tariff shock by reducing their margin and wind up passing more of the increased cost to the consumer.
For importers, this means product mix matters. A business bringing in a broad assortment of goods — from value-tier items with thin margins to premium lines with pricing power — will experience a very different pass-through picture across its catalog. Treating all SKUs the same when making pricing decisions is one of the most common and costly mistakes in the current tariff environment.
The Frontloading Trap — And Its Hidden Costs
A dominant importer response to tariff uncertainty through 2025 and into 2026 has been inventory frontloading: accelerating purchases to stock up at pre-tariff or lower-tariff prices. The logic is defensible in the short term, but frontloading introduces its own cost stack that is easy to underestimate. The hidden cost stack can include higher ocean freight, customs value exposure, broker rework, tariff classification mistakes, warehouse overflow, demurrage, detention, cash tied up in early inventory, forced-labor documentation, trade-law review, and price concessions to move goods that arrived before demand was ready.
And the strategy has a structural vulnerability: in 2025 and 2026, tariffs have been an ongoing condition with no stable baseline to plan around, and a strategy built for a single rate change does not hold up when rates shift repeatedly and unpredictably. Importers who executed a large frontload in early 2026 and are now seeing those inventories draw down are encountering a fresh set of decisions about whether to reorder at current duty rates or wait for potential policy shifts.
What Importers Should Be Doing Now
The research points to several practical operational responses that are within reach for importers managing these pressures.
Review your landed cost model at the SKU level
Global tariff rates have shifted enough that landed cost calculations built even twelve months ago may no longer reflect your true duty exposure. Accurate HS code classification, correct customs valuation, and current duty rates for every origin country in your supply mix are the foundation of any pricing or sourcing decision. Working with a licensed customs broker partner is essential here: U.S. Customs and Border Protection continues to emphasize importer responsibility, and importers are expected to exercise reasonable care when classifying products, determining country of origin, and calculating applicable duties.
Audit your contracts for price-adjustment language
If your sales contracts do not include tariff adjustment clauses, you are effectively absorbing future rate changes in silence. Renegotiating or adding tariff pass-through provisions to customer and supplier agreements is a structural fix that limits exposure during the months-long lag between a rate change and a permissible price increase.
Monitor the pipeline actively
Because pass-through is gradual and businesses are still adjusting prices more than six months from now according to 16 percent of service firms and 7 percent of manufacturers surveyed by the New York Fed, the competitive pricing environment for your category may shift materially in the next two to three quarters. Importers who are watching how peers and competitors are pricing can spot the moment when absorbing costs becomes competitively untenable.
Evaluate sourcing diversification
For goods with high tariff exposure, tariffs are often part of broader trade policy shifts that affect sourcing, transportation, inventory planning, and market access, and importers should focus on building supply chain resilience by reducing overreliance on a single sourcing location. Diversification takes time, but the businesses furthest along in that process are navigating the current environment with materially more flexibility.
How ASR Can Help
Navigating tariff pass-through is not just an economics problem — it is a logistics and customs execution problem. Every dollar of unnecessary delay, misclassification, or warehousing cost makes your position worse. ASR WorldWide Express works with licensed customs broker partners to help importers get their entries right, coordinate efficient cargo movement, and reduce the administrative friction that compounds tariff exposure. Whether you need tighter visibility into your landed cost, faster clearance turnaround, or help managing freight volumes during a frontloading cycle, we are here to help.
Call us at +1 786 373 3003 or email shipping@asrwe.com to speak with our team.
Important Disclaimer
This article is intended for general informational purposes only and does not constitute legal, tax, or customs compliance advice. Tariff rates, regulatory requirements, and trade policy conditions change frequently. Importers should consult a licensed customs broker, trade attorney, or qualified compliance advisor for guidance specific to their situation.
