Shoppers in Walnut Creek, California, US, on Tuesday, Oct. 7, 2025.
David Paul Morris | Bloomberg | Getty Images
President Donald Trump’s tariffs are pushing inflation generally higher as companies are caught between absorbing the costs or passing them onto customers, according to a Federal Reserve report Wednesday.
The central bank’s periodic Beige Book report, published eight times a year generally at about six-week intervals, categorized overall economic growth as having “changed little” since the last report on Sept. 3. Labor markets “were largely stable” as demand was “muted” for most of the Fed’s 12 districts.
When it came to prices, though, Trump’s duties implemented in April and then staggered through ensuing months showed an impact.
“Prices rose further during the reporting period,” the report stated. “Tariff-induced input cost increases were reported across many Districts, but the extent of those higher costs passing through to final prices varied.”
In some cases, firms held prices unchanged to stay competitive and to appease inflation-sensitive clients. However, some businesses said they were “fully passing higher import costs along to their customers.”
A few districts reported that slowing demand actually pushed prices down for materials.
The trade war has escalated in recent days as China has ordered restrictions on coveted rare earths materials, while Trump has retaliated with a threat of 100% tariffs on Chinese imports.
The release comes amid a dearth of relevant economic data due to a government shutdown entering its third week. Key providers such as the Labor and Commerce departments are largely closed due to the impasse.
However, Bureau of Labor Statistics workers have been called back to release the pivotal consumer price index report used both as an inflation gauge and to index cost of living adjustments for Social Security recipients. The CPI reading, which normally would have been released Wednesday, will come out Oct. 24, the last inflation reading the Fed will get before its policy meeting Oct. 28-29.
The Beige Book said consumer spending nudged lower in recent weeks, though it noted “strong” spending on luxury items and travel by upper-income earners. Lower and medium earners, meanwhile, pursued discounts and promotions.
Future expectations improved in some districts, though Philadelphia reported caution over a prolonged government shutdown.
