Dallas Fed Study Finds Tariffs Fully Passed Through to Consumer Prices

Core inflation would have been nearly a full percentage point lower in March without tariffs, according to a study by researchers at the Federal Reserve Bank of Dallas published last week. The study determined that tariffs have had a full pass-through to consumer-facing inflation. 2% in March, the highest level recorded since 2023.

3%. The study focused on realized tariff rates rather than announced tariff rates. 4%, the highest realized tariff rate in decades.

Com reported that even though the actual tariff rate being paid was smaller than what earlier announcements would have implied, it still produced measurable consumer pain. Companies have exhausted means to minimize tariff pressure, including sourcing goods domestically or finding alternative trading partners. Those unavoidable expenses are now passed fully to consumers.

U.S. consumers and companies were paying for nearly 90% of tariff costs. Trump’s 2025 tariffs amounted to a tax increase of $1,000 for the average American household, according to the Tax Foundation.

A scaled back tariff regime in 2026 would levy $700 per household on average. The full effect of tariffs takes seven months to manifest in consumer prices, according to separate Federal Reserve research published last month. That research found firms tend to preserve consistent profit margins despite changes to tariff policies.

“If retailers’ acquisition costs for a good rise $1 because of tariffs, they charge $1 more for that good seven months later,” the authors wrote. The debate about who pays for tariffs has played out in boardrooms and at kitchen tables across America.

U.S. Consumers have been its biggest financier. Companies are no longer absorbing tariff costs by paying duties at the border. Instead, those costs have transferred fully to the public in the form of higher prices for goods and services.

Earlier projections of tariff costs were primarily forecasts based on political announcements and fact sheets. Firms may delay pricing decisions, tweak where they source imports, or wait for policy to settle before passing costs through. The Dallas Fed’s report validates similar findings with its emphasis on realized rates.

The actual duties collected on goods and services coming into the country produced the inflation effects now visible. U.S. corporations to the average American shopper.