Since the Trump administration started imposing steep tariffs on goods from the rest of the world, the Treasury Department has been taking in about $30 billion a month in customs duties. On paper, American companies pay those bills when their products enter the country.
But figuring who ultimately absorbs the costs is more complicated. Inflation data, which will be updated on Friday after being delayed by the government shutdown, has thus far shown limited effects for consumers. Corporate earnings calls in recent weeks suggest that is changing.
Companies had passed along about 37 percent of new tariffs to consumers, forced 9 percent onto their suppliers and absorbed 51 percent through August, according to Goldman Sachs. That is a big hit to shoppers’ wallets, enough to reverse inflation’s fall. But it’s milder than it would have been if companies were charging as much to consumers as they had at the same point in the last burst of tariffs during President Trump’s first term.
Mostly that’s because the tariffs are much higher and more widespread than in 2018, making them too difficult for consumers to digest all at once. Corporate profit margins are also healthier, consumers are more exhausted by price increases over the past several years — and companies suspect the White House may back down on tariffs eventually.
Michael McAdoo, a partner at the consulting firm BCG’s global trade and investment group, said many of his clients had swallowed the tariffs at first while waiting for the landscape to stabilize. But now, he said, “some are trying to squeeze the foreign supplier, and some are trying to improve their own operations, and some are using pricing.”
Throughout corporate America this earnings season, a theme emerges: Companies want to keep prices low. But they know investors won’t accept narrower profit margins for long, so they have to figure out how to make up for tariff costs.
Nike told investors last month that it expected to pay $1.5 billion in tariff costs in its current fiscal year, and the toymaker Mattel estimated its tariff costs at $100 million. Raytheon, a defense manufacturer, said it had paid $220 million in tariff costs in the third quarter, and 3M, the medical and consumer products manufacturer, spent $100 million on tariffs and related costs. The oil industry contractor Halliburton forecast $60 million in tariff costs for the fourth quarter.
It’s not always clear how much of those expenses companies may recoup in other ways. Some companies say they’ve fully offset the costs: Autoliv, which supplies parts to carmakers, said it had recovered about 75 percent of its tariff costs and expected to make up for all of them by the end of the year.
Autoliv’s customers, however, are not fully factoring those extra costs into the sticker price on dealer lots. General Motors said it anticipated paying between $3.5 billion and $4.5 billion in tariffs this year, and has raised prices by less than 1 percent. Much of the rest is pulling from its bottom line: The automaker said tariffs had squeezed its margins in North America from 9 percent to 6.2 percent in the third quarter.
That reluctance to ask car buyers to pay more reflects a hope that the tariffs will be temporary — the industry is lobbying the Trump administration to lift them — and competition from domestic producers. New vehicle prices have fallen slightly since their peak in 2023, inflation data through August showed.
“Automakers have generally held steady on price hikes because they’re holding out for tariff relief,” said Andrew Schneider, a senior economist with BNP Paribas. “Automakers that aren’t as exposed to tariffs have tried to take share, and lower prices a bit, and put the pressure on others.”
Some companies are benefiting as tariffs make imports more expensive. The steel maker Cleveland-Cliffs said its third-quarter results were “a clear indication that a significant rebound in domestic steel demand has started.” The company’s orders from automakers jumped after aluminum and steel tariffs took effect in March. That higher-grade steel costs more, driving up margins.
A similar story is playing out across the economy. Domestic prices have climbed only slightly behind prices for imported goods, according to data from the Harvard Pricing Lab, as U.S. manufacturers have become more competitive and padded their margins.
Some companies are both winning and losing because of tariffs. Paccar, the maker of Kenworth and Peterbilt trucks, said it had taken a $75 million hit in the third quarter from steel and aluminum tariffs, which it only partly recovered through surcharges to customers. But with a new 25 percent tariff on completed trucks set to take effect on Nov. 1, the company expects more orders next quarter.
Even companies that have held off on price increases are signaling that they intend to institute them down the road — especially as ever more tariffs are imposed. In sectors that rely heavily on imports, passing through those tariff costs could be easier because consumers have fewer domestic options.
Prices have already risen particularly swiftly in categories like home furnishings and recreational goods because so many of those products come from China. New furniture tariffs will force costs even higher. The furniture maker Flexsteel declined to provide guidance for the next quarter because the tariff outlook was so uncertain.
“We anticipate the tariff change to result in broad price increases for furniture in the U.S., dampen consumer demand and compressed industry margins in the short term for suppliers, manufacturers and retailers,” Derek Schmidt, Flexsteel’s chief executive, told investors.
Banks are noticing, too. Timothy Spence, the chief executive of Fifth Third Bank, estimated that suppliers, importers and customers were each absorbing a third of tariff costs.
“But the supplier and the intermediaries have also been clear whenever we talk to them that their intent is ultimately to get back to prior margins,” Mr. Spence said on the bank’s earnings call last week. “Which would mean over time, you would see continued price increases as a mechanism to move the cost through.”
Tariffs passed through to consumers gradually could keep inflation elevated for a longer period.
Public companies have more leverage to ask their suppliers for concessions and find other cost savings across their supply chains.
“When you think about the largest businesses, they’re not bearing the full burden of the cost on their own earnings,” said Stephen Juneau, a U.S. economist with Bank of America. “They’re able to exert their own purchasing power on their suppliers and push down and share the burden of the tariffs across their supply chain.”
Smaller businesses have fewer options. Richard Rosenfeld, owner of Two Leaves and a Bud, a Colorado-based tea company, was preparing a big expansion as matcha grew in popularity. Then he hit a wall of tariffs — virtually no tea is grown in the United States, so the only options are imported.
He held off on price increases for a while, working through inventory and holding off on hiring more people, waiting to assess the consequences.
“There’s a lot of elasticity in the system,” Mr. Rosenfeld said. But the rubber band has stretched as far as it can go, and he recently imposed the largest price increase in his company’s history.
“We’ll have another price increase absolutely coming soon,” he said. “And I can’t imagine that we won’t have multiple rounds of price increases next year as all these tariffs affect not only us but all the suppliers who supply us and supply our suppliers.”
Lydia DePillis reports on the American economy for The Times. She has been a journalist since 2009, and can be reached at [email protected].
Kailyn Rhone is a Times business reporter and the 2025 David Carr fellow.
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