Tariffs are not causing America’s inflation. If you want to know what is driving up consumer prices, look at the September Consumer Price Index. According to the latest data, prices rose 3.7 percent over the past year, driven by rising energy and services costs — not tariffs. In fact, gasoline jumped 9.1% in September — and is up 34.2% from a year ago.

You wouldn’t necessarily see this in recent news headlines, however. Earlier this month, economists at the New York Fed published one of the most detailed studies yet of recent U.S. tariffs. Some are now using that study to say recent inflation has been driven by the tariffs.

A tariff is a duty paid on imported goods. If tariffs alone were driving up prices, you would see that reflected in goods prices. But the slice of the inflation index covering everyday goods besides food and energy rose only 0.7% year-over-year. And as just two examples, new cars are up only 0.6%, and used cars are actually down 1.5%.

More dramatically, nearly all of the overall inflation hitting U.S. consumers comes from services and energy. Housing is up 3.2%, airfares are up 22.4%. There are no tariffs on leases, mortgages, hospital bills or plane tickets. These prices are rising far more than any tariff-related goods.

By the New York Fed study’s count, tariffs added 2.9 points to goods inflation at their peak in February 2026. The Fed also found that tariffs’ contribution to inflation fell to roughly zero by August. Even when the Fed said the tariff effect peaked in February, actual goods inflation was just 1%. To put it plainly: tariffs briefly pushed prices somewhat higher, but their effect on inflation is now essentially gone.

You wouldn’t know it from news pundits, though. One major headline proclaimed, “Inflation on many everyday items was entirely due to tariffs, NY Fed says.” However, the Fed paper said the opposite — that tariffs had a one-time price effect, and it’s now over. Inflation is still continuing, but tariffs are no longer contributing to it.

One part of the Fed study has gotten plenty of attention, though. It claims that — without tariffs — goods prices would have fallen 1%. Even if that were exactly right, it would apply to only a small portion of overall household expenses. What’s really breaking the family budget is the 34% jump in gasoline prices — and the spillover energy costs now affecting other goods and services.

The Fed study clearly has its limits. The model it used to arrive at this 1% figure assumed that the dollar, wages, demand and interest rates would all remain the same. In actuality — and over the same period — the dollar weakened, energy prices soared, and the cost of services rose more than 3%.

A close read of the Fed study shows that only about a quarter of a tariff’s cost ever reaches the consumers. That means raising the average tariff by 1 percentage point will raise goods prices by a quarter of a percent over the following year. Then that increase will stop entirely.

Moreover, three-quarters of a tariff’s cost never reaches consumers. Instead, shipping, wholesale and retail costs account for half of the price at the register — and none of that is even tariffed. Many everyday items that Americans buy are made in the United States. That means they never cross a border and carry no tariff whatsoever.

The Fed study also reported that a third of the modest tariff price effect came from American producers. Why? Because the tariffs succeeded in making U.S. production become more sustainable. That is the policy working. It’s not money wasted. Instead, it represents new support for domestic U.S. plants, jobs and payroll.

The inflation Americans feel in 2026 is real, but it’s coming from the gas pump, the rent check, and the hospital bill. The Fed’s economists now put the tariff contribution to goods inflation at almost zero today.

According to the CPI, total annual goods inflation is running 0.7% right now. If Washington wants to fight rising prices, it should address the higher costs of energy, housing and healthcare. Don’t blame the tariffs. As even the Fed has reported, their effect on inflation has come and gone.

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ABOUT THE WRITER

Andrew Rechenberg is a senior economist at the Coalition for a Prosperous America. He wrote this for InsideSources.com.

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