Companies are starting to shift more tariff-related costs onto consumers.

Many businesses chose to absorb the additional tax during the early days of

US President Donald Trump’s trade war

. But evidence is emerging that they are running out of options to keep prices stable in the face of deteriorating profit margins, suggesting that the tariffs could have a more pronounced effect on prices in the months ahead.

Government data shows that prices rose in June on items heavily exposed to tariffs, such as home furnishings, toys and appliances.

And in recent days – before Mr Trump

announced tariffs for much of the world

on the night of July 31 – Adidas, Procter & Gamble, Stanley Black & Decker and other large corporations told investors that they either had increased prices or planned to do so soon to offset the tariff costs.

Companies like Walmart and toy makers Hasbro and Mattel had already warned that tariffs would lead to higher prices.

“We have no interest in running a lower-margin business, particularly due to tariffs,” Mr Richard Westenberger, the chief financial officer of Carter’s, a children’s apparel maker, said on a call with analysts on July 25.

“And if this is something that’s going to be a permanent increase to our cost structure, we have to find a way to cover it.”

Economists have been watching for signs of tariff-related price increases since Mr Trump rolled out his trade policy in the spring. But inflation remained relatively muted, defying expectations and prompting the White House to declare that those who predicted the tariffs would elevate prices were mistaken.

Even some forecasters are acknowledging that the tariffs have taken longer to work their way through to consumer prices than initially anticipated.

Mr Jerome Powell, chair of the Federal Reserve, said on July 30 that the process might be “slower than expected at the beginning”.

“We think we have a long way to go to really understand exactly how it will be,” he said.

Ms Sarah House, an economist at Wells Fargo, said the next three to six months would be “crunch time”, as more tariff rates solidified.

“Businesses are grappling with the fact that tariffs are here to stay, and as there’s more certainty around a higher tariff environment, they are going to be more willing and able to adjust their prices,” she said.

“We’re getting to a point where you’re going to start to see those feed through.” NYTIMES

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