According to a Federal Reserve report on Wednesday, companies handling the early stages of President Donald Trump’s tariffs are looking for ways to pass on the growing costs to consumers.
Just as Trump ordered collections to be collected for higher obligations for US imports and Chinese products, the Fed’s beige book showed how they go. The company reported that it had received notifications from suppliers about rising costs, and while paying attention to uncertainties about its ability to pass on to customers, it sought to find ways to not absorb the rise.
“Most districts pointed out that businesses expect increased input costs due to tariffs,” the report said. “Many companies have already received notifications from suppliers that costs will increase.”
Broadly speaking, the report is published about every seven weeks, characterising economic growth as “almost unchanged” from its March 5 report, but states that “uncertainty about international trade policy spread across the Fed 12 districts.”
Prices usually rose during the period that included the announcement of tariffs on Trump’s April 2nd “liberation day” blankets. Amid a decline in personnel in government jobs, employment has “almost changed.”
“Companies have reported that they will either add additional tariff charges or shorten the range of pricing, taking into account uncertain trade policies,” the report said. “Most companies were expected to pass additional costs to their customers. However, there were reports on margin compression amidst rising costs, especially in consumer companies, as demand remained lukewarm in some sectors.”
In the New York area, businesses have reported rising prices, particularly food and insurance, along with construction materials. Manufacturers and distributors said they have already added additional charges with shipments.
There were also signs of trouble in the trade dispute with Canada. Tourists have booked few hotel rooms in New York City, and at least one high-tech company has reported losing business contacts in Canada.
“The outlook for services sector companies has deteriorated significantly, and we expect a sharp decline in activity in the coming months. Services sector companies have reported a major drawback in planned investments,” the report states.
The report also pointed to the impact of the Elon Musk-led Government Efficiency Bureau on employment in the Washington, D.C. area. Doge tried to hold back the federal workforce, lay off thousands of people and provide shopping for others.
The overall picture of employment was “unchanged” overall, but “many federal workers have either taken administrative leave or have taken administrative leave over the last few weeks.”
“These cuts to the federal workforce have affected businesses across the district. Additionally, federal contractors have fired workers in response to spending cuts. For example, research institutions headquartered outside the DC area due to contracts being cancelled. Similarly, consulting firms in Northern Virginia fell 25% because they lost half of their contracts,” the report added.
Elsewhere in the report, service organizations that rely on government support have pointed out difficulties since the White House began launching culs through federally aid agencies. The report specifically cites New York food banks looking at programmes and staffing cuts.
“Contacts for nonprofits and other community-based organizations have expressed great concern about the future of federal fundraising and service support, creating challenges in staffing, strategies and planning,” the report said.
Get tickets to Pro Live
Join the New York Stock Exchange!
An uncertain market? Earn Edge with CNBC Pro Live, the first exclusive event on the historic New York Stock Exchange.
Access to expert insights is paramount in today’s dynamic financial situation. As a CNBC Pro subscriber, we recommend attending the first exclusive and in-person CNBC Pro live event held at the iconic NYSE on Thursday, June 12th.
Join the interactive professional clinic led by professional Carter Worth, Dan Niles and Dan Ives, along with a special edition of a professional talk with Tom Lee. You will also get the opportunity to network with CNBC experts, talent and other pro subscribers during exciting cocktail hours on the legendary trading floor. Tickets are limited!
