Michael S. Derby

NEW YORK - Most businesses in the New York Fed region say they have higher President Donald Trump tariffs at least last month, as companies have caused enormous confusion and uncertainty as import taxes nearby increase.

As of early May, “most businesses imposed at least some higher tariffs on their customers, with nearly one-third of manufacturers and about 45% of service companies raising prices entirely through all the costs caused by all relevant taxes.”

About three-quarters of the two types of companies are raising prices through at least some form of tariff-related price increases.

The Fed in New York pointed out that between May 2 and May 9, when Trump's import tax rate on China soared to 145%, its investigation captured the conditions. The president later retreated and cut taxes to 30%, and now faces a court challenge, and if successful, most of his efforts to raise import taxes to historically high in order to bring more manufacturing activity back to the United States

The latest round of tariffs doubled the import duties of aluminum and steel.

When conducting the survey, the factory company estimated its tariff level at 35%, while the service company said it was 26%. Manufacturing companies said the prices of their tariff items rose by 20%, while services companies reported a 15% increase in customer prices.

"Although these figures are very close to the increase in the average tariff rate for companies, the company's tariff costs may not increase compared to tariffs, as importers may have turned to suppliers in other countries or the United States," the report said. It noted that foreign producers may have lowered prices to offset the tariff increase.

The survey also found that “a large number of businesses” said they increased prices for goods and services that were not affected by tariffs.

Trump and White House officials argue that foreigners pay tariffs, a debate that most economists refuse. There is a big question among investors, economists and policy makers about how much of an unchanging tariff agenda will be passed in the form of higher prices.

Most economists and Fed officials expect tariffs to increase inflation while reducing growth and employment this year, but the persistent question is whether the rise is a deal or something more lasting. Some in the Fed believe that one-time price increases are the kind of things that monetary policy can explore, and that the continued inflation rate will deserve some response.