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Summary:
Following the inflationary surge from 2021 to 2023, which was touched off by supply chain constraints and shipping bottlenecks, we evaluate a new panel of own-firm price and unit cost growth expectations in the Atlanta Fed's Survey of Business Uncertainty for signs that the anticipated impact from tariffs is broadening beyond directly affected firms. We find evidence for the potential of tariffs to touch off another bout of high inflation. First, firms that are directly exposed to tariffs have increased their year-ahead price growth expectations sharply (by 0.7 percentage points). Second, firms that are not directly exposed to tariffs but are operating in industries that are highly exposed to tariffs anticipate a moderately higher trajectory for year-ahead price growth (0.3 percentage points). Third, this broadening of overall price pressures—a key feature of the pandemic-era inflationary impulse—is only partially offset by lower price increases from tariff-exposed firms that are operating largely in industries not exposed to tariffs.
Key findings:
- Firms, en masse, have increased their year-ahead price growth expectations since the end of 2024. This is especially true for firms directly exposed to tariffs.
- We find evidence of a broadening out of the influence of tariffs beyond those directly exposed. Unexposed firms in exposed industries anticipate a moderately higher trajectory of year-ahead price growth.
- The broadening of anticipated price growth is only partially offset by lower price growth expectations among tariff-exposed firms that are operating in largely unexposed industries.
Center Affiliation: Economic Survey Research Center
JEL classification: C83, D22, D70, F14
Key words: business surveys, expectations, trade policy
https://doi.org/10.29338/ph2025-04