New York Fed researchers found that tariffs pushed consumer goods prices up by 2.9 percentage points from early 2025 through February, and that prices would have fallen without the import taxes. The pass-through is fast at the border: import prices adjust almost completely within the first month, while indirect channels build more slowly as higher input costs and reduced competitive pressure feed through. Consumer inflation expectations for the year ahead rose to 4.7% in October, the highest reading since May. For e-commerce operators, the practical consequence is that catalogue pricing has stopped being a seasonal exercise.
Key Conclusions
The first conclusion is that cost baselines in e-commerce catalogues now decay faster than promotion calendars. Prices rise about 0.25% for every percentage point increase in average tariffs after a year (Federal Reserve Bank of New York), which means a cost baseline set in January is materially wrong by the following winter. Merchants that reprice only at seasonal events are therefore carrying a systematic margin error that grows between those events.
The second conclusion concerns where the error hides. Direct pass-through is nearly complete in the first month, so import cost changes are visible early and get absorbed quickly. Indirect channels build slowly, which means domestic input costs and reduced competitive pressure keep pushing prices up long after the headline tariff change has been recorded. Consumer inflation expectations for the year ahead reached 4.7% in October (Retail Dive), and expectations of that kind tend to become self-fulfilling when suppliers and shoppers both plan around them.
The third conclusion is about assortment structure. A uniform percentage increase applied across a catalogue is rarely what actually happens. Tariff exposure varies by country of origin, category and price tier, so the cost increase lands unevenly and changes the relative attractiveness of items within the same category. Treating the increase as uniform flattens the differences that should drive assortment decisions.
The Pass-Through Curve: Where Cost Lands First
Mapping the pass-through curve to a catalogue is mostly an exercise in sequencing. Items with high import content and thin competitive buffers move first, because there is no margin left to absorb the change. Items in categories with strong domestic competition move later, and items already priced at a promotional floor may not move at all until the promotion ends.
Direct And Indirect Channels
The direct channel is straightforward to model: cost changes at the border, and import prices adjust almost fully within a month. The indirect channel is harder because it operates through domestic suppliers who face higher input costs and less competitive pressure. For a catalogue, this means a second wave of cost increases arriving two to three quarters later, often attributed to supplier pricing rather than to the original tariff change.
Why Uniform Repricing Fails
Applying one uplift across a catalogue is administratively simple and analytically wrong. The correct unit of analysis is the item-origin pair, weighted by the share of landed cost that originates in tariff-exposed markets. Building that view requires landed cost data at item level, which many e-commerce operators have only at category level. Closing that gap is the precondition for any repricing model that claims to be evidence-based.
Best Practices
Rebuild Cost Baselines On A Rolling Clock
Move from annual or seasonal cost baselines to a rolling baseline refreshed every four to eight weeks for the most exposed categories. Each refresh should record the source of change, the effective date and the item set affected, so that margin movement can be attributed rather than guessed. A rolling baseline also makes it possible to separate genuine cost movement from promotional discounting, which is otherwise the single largest source of margin noise.
Track Price Elasticity By Origin Mix
Because cost increases land unevenly, elasticity should be measured by origin mix rather than by category alone. Two items in the same category can have very different tariff exposure and therefore very different price ceilings. Segmenting elasticity this way lets merchants decide which items absorb the cost through margin and which items pass it through, instead of applying the same rule everywhere.
Both practices assume that landed cost is available at item level and that promotional and permanent price changes are stored separately. When they are mixed into a single price field, no amount of downstream analysis can recover the split. Separating the two fields is a small schema change with a disproportionate effect on how well a catalogue responds to cost shocks.
Common Mistakes
The first mistake is assuming that a tariff change is a one-time event. The direct channel does settle within a month, but the indirect channel keeps feeding through for several quarters, so a single adjustment understates the eventual cost. The second mistake is passing the full increase to shoppers immediately. Retail Dive tracks how affordability concerns shape spending, and a sharp visible increase in a category that shoppers treat as essential tends to shift volume to cheaper substitutes rather than raise revenue.
A third mistake is ignoring the effect on marketplace sellers. On a marketplace, third-party merchants absorb the cost change on their own timelines, which means a platform can end up with a catalogue where similar items carry inconsistent pricing. Monitoring seller-level price dispersion is the only reliable way to detect that situation before it damages the credibility of the category page.
Three Metrics For A Repricing Programme
The first metric is baseline age, reported as the median number of weeks since the cost baseline for each item was last refreshed. A median above eight weeks in an exposed category indicates that the pricing team is working from stale inputs and that margin reporting is likely to be revised later.
The second metric is realised versus modelled pass-through. Track the actual price change achieved against the change the model predicted, by origin mix. Persistent gaps point to either elasticity assumptions that are too aggressive or to competitive pressure that the model does not capture. Retail Dive shows how quickly margin pressure becomes visible in reported results once cost changes outrun pricing decisions.
The third metric is price dispersion within a category page. Rising dispersion signals that different sellers or different internal systems are reacting to the same cost change on different clocks. Seasonal baselines from sources such as Coresight Research help separate a genuine structural shift from the normal widening of price ranges that happens during a promotional period.
Summary
A 2.9 percentage point increase in consumer goods prices, with roughly 0.25% of additional price for every percentage point of average tariffs after a year, is a structural change rather than a temporary shock. E-commerce catalogues that rely on seasonal cost baselines will accumulate margin error between repricing events, and the error compounds as the indirect channel continues to feed through.
The response is operational rather than strategic. Rebuild baselines on a rolling clock, store promotional and permanent price changes in separate fields, measure elasticity by origin mix, and monitor dispersion across marketplace sellers. None of these steps is complex, but each one requires item-level landed cost data, which remains the real constraint for most operators.
Data Sources
- Retail Dive: Tariffs pushed up consumer goods prices by 2.9 percentage points, October 12, 2026.
- Federal Reserve Bank of New York: How fast do tariffs pass through into consumer prices, October 2026.
- Retail Dive: Retail Dive e-commerce coverage, October 2026.
- Retail Dive: Retail Dive financial news coverage, October 2026.
- Retail Dive: Retail Dive consumer trends coverage, October 2026.
- Coresight Research: Coresight Research US holiday retail survey, October 2026.
FAQ
How large is the tariff effect on consumer goods prices?
A: New York Fed researchers put the increase at 2.9 percentage points from early 2025 through February, and note that prices would have fallen without the import taxes.
Why does the cost keep rising after the tariff is recorded?
A: Direct pass-through completes within about a month, but indirect channels build slowly as domestic suppliers face higher input costs and reduced competitive pressure, producing a second wave two to three quarters later.
Why is uniform catalogue repricing a mistake?
A: Tariff exposure varies by country of origin, category and price tier, so a single uplift flattens real differences between items and distorts assortment and elasticity decisions.
What is a rolling cost baseline?
A: A baseline refreshed every four to eight weeks for exposed categories, with each refresh recording the change source, effective date and affected items so margin movement can be attributed.
Why separate promotional and permanent prices?
A: When both are stored in one field, analysis cannot distinguish genuine cost movement from discounting, which makes realised pass-through impossible to measure and margin noise unmanageable.
References
- https://www.retaildive.com/news/tariffs-pushed-up-consumer-goods-prices-ny-fed-inflation-elections-tax-taxes/832701/
- https://libertystreeteconomics.newyorkfed.org/2026/10/how-fast-do-tariffs-pass-through-into-consumer-prices/
- https://www.retaildive.com/topic/e-commerce/
- https://www.retaildive.com/topic/financial-news/
- https://www.retaildive.com/topic/consumer-trends/
- https://coresight.com/us-holiday-retail/
