2026-10-09 · contested story
New York Fed: Trump's Tariffs Kept Everyday Prices Higher
On October 6, 2026, the Federal Reserve Bank of New York published research on its Liberty Street Economics blog finding that President Trump's 2025-26 tariffs contributed 2.9 percentage points to US goods price inflation, and that without those tariffs 'goods prices would have fallen slightly.' This fed into a broader, year-long debate about whether tariffs drove up consumer prices — a debate complicated by competing Fed research, an Iran war that spiked oil prices, and an AI-investment boom. By the time of the NY Fed study, a newly Trump-appointed Fed chair, Kevin Warsh, had raised interest rates in September 2026 (the first hike in three years) to combat persistent inflation, defying Trump's demands for cuts.
How each side frames it
left
"Trump prefers to play make-believe amid discouraging news on inflation"
"But grocery prices are up, not down, and inflation obviously hasn't been “taken care of.”"
"Through October 7, most major news organizations had failed even to mention this research yet."
"by February 2026, tariffs had contributed 2.9 percentage points to goods price inflation, and without them goods prices would have fallen slightly"
"the American economy keeps trudging forward like a gut-shot zombie, damaged but undeterred by the bullets it has absorbed"
center
"Federal Reserve officials worried that higher costs tied to energy, AI investment and other shocks could spill over into broader, more persistent inflation"
"FOMC minutes show the Fed ready to hike again in 2026 as AI buildout replaces tariffs as main driver of core prices"
"the effects of the AI buildout appeared to increase while the effects of tariff increases waned"
"All 19 Federal Reserve officials backed the decision in September to raise interest rates, with many supporting the move to guard against the risk of intensifying inflation pressures."
"Core” PCE, the Fed's preferred inflation measure, rose a relatively cool 3% in August, beating expectations"
right
"It's early yet to know whether President Trump's tariffs will push up prices, but the head of the Chicago Fed suggests that fears of inflation could be overstated."
"Productivity gains thus strongly offset the increase in consumer prices induced by tariffs"
"America's average tariff rate has increased nearly sevenfold in the past year — yet inflation has cooled and corporate profits have increased."
"Joe Biden Gave Donald Trump a Much Worse Economy Than Many First Realized"
"Just imagine - taxing things makes them more expensive. Who would have thought THAT?"
What each side left out
The left left out — covered by the Newsmax & New York Post & Kitco
- Boston Fed finding that productivity gains offset much of tariff inflation
- revenue gains from tariffs (e.g., $287 billion collected in 2025)
- AI buildout as a competing/primary driver of core goods inflation
The left left out — covered by the New York Post & Newsmax
- Administration/White House rebuttal that inflation 'cooled' despite tariffs
- Kevin Hassett's criticism that NY Fed research was 'deeply flawed'
The right left out — covered by the Media Matters & MSNBC & New York Post
- NY Fed counterfactual that goods prices 'would have fallen slightly' without tariffs
- The framing that tariffs act as a regressive tax on US consumers
The right left out — covered by the MSNBC
- Trump's repeated false claim that inflation is 'gone' / 'taken care of' being fact-checked
The center left out — covered by the Media Matters & MSNBC
- The political blame framing and Trump's rhetoric vs. reality
- Media-criticism angle about outlets ignoring the NY Fed study
What's actually true?
[verified] NY Fed research found Trump's 2025-26 tariffs contributed about 2.9 percentage points to goods price inflation, and without them goods prices would have fallen slightly.
[verified] A NY Fed study found US businesses and consumers bore about 90% of the cost of Trump's 2025 tariffs.
[verified] Boston Fed research found productivity gains offset much of the tariff-induced price increase, adding about 0.5 percentage point to core PCE.
[verified] The Fed raised interest rates in September 2026 by a quarter point to a 3.75%-4% range, its first hike in three years, in a unanimous decision.
[verified] NY Fed President John Williams estimated tariffs added roughly 0.5 to 0.75 percentage points to the inflation rate, which stood near 3%.
[verified] Most Fed officials in September projected at least one more rate hike before year-end (16 of 18 who submitted forecasts).
[verified] Trump claimed inflation had been defeated/taken care of, stating 'Prices are way down for everything — groceries, everything.'
[verified] By late 2026, Fed officials increasingly attributed core goods inflation to the AI buildout and energy prices (Iran war) rather than tariffs, whose effects were waning.
The narrative clash
Who bears the cost of tariffs — foreign exporters or US consumers/businesses
Left: Contrary to administration claims, exporters are not “eating the tariffs.”
Right: Instead, Austan Goolsbee finds that producers and importers are absorbing much of the cost of the tariffs, largely sparing the consumer from higher prices on imports.
Whether tariffs are the primary driver of elevated inflation
Left: His import tax increases became one of the key factors that started a resurgence of inflation
Right: Several FOMC members observed that the rate of price increases in the core goods category also remained elevated, as effects of the AI buildout appeared to increase while the effects of tariff increases waned.
Whether tariff inflation materialized as predicted
Left: there were signs that the duties are having an impact
Right: The levies have yet to show up in the inflation numbers — at least not so far.
40 sources analyzed
MSNBC Media Matters The Boston Globe The New York Sun Charlie Kirk New York Post Vox New York Post New York Post Politico MSNBC The New York Sun MSNBC MSNBC Axios NBC News thestreet.com Kitco Fox News Newsmax Newsmax NPR AP News The New York Sun The Boston Globe Vox New York Post Reuters WSJ The New York Sun The Boston Globe Fox Business Yahoo Finance washingtonpost.com Business Insider Barron's 富途牛牛 Bloomberg.com U.S. News & World Report CNN