Report: Kentucky businesses tell federal bank they expect price hikes due to tariffs
A quarterly survey of businesses by the Federal Reserve of Cleveland showed 64% of businesses expected to be impacted by President Donald Trump’s hike in tariffs on foreign products, and many said they expected rising costs to be passed on to customers through price increases.
The Federal Reserve of Cleveland’s quarterly Survey of Regional Conditions and Expectation asked businesses in its district area that includes Ohio, eastern Kentucky, western Pennsylvania and the northern panhandle of West Virginia, a series of questions related to tariffs in February. More than 144 businesses responded to the questions.
Of those who said tariffs would affect their business:
- 85% expected higher input costs
- 75% expected to increase prices
- 60% expected demand to decrease
- 75% expected no impact on employment.
Companies were also asked how increased costs would change how they did business. Approximately 46% said they anticipated passing on increased costs to customers, 29% anticipated finding domestic suppliers and 27% anticipated stockpiling or ordering more products subject to increased levies prior to the tariffs taking effect in April.
Trump has implemented a 25% increase in tariffs for all foreign-made automobiles and a hefty 145% hike in tariffs on products from China. Trump has proposed other tariffs on imports from other countries but then paused many of those tariffs to bring countries to the negotiating table.
Trump has argued the hikes in taxes on foreign goods is a way to prop up and reinvigorate American manufacturing and solve trade imbalances.
The fed survey showed retail and manufacturing sectors were the most concerned about tariffs — 82% of those in retail and 75% of those in manufacturing said they were concerned about the impact of tariffs.
Construction and real estate sectors are also cautious with 70% of that industry saying it would impact their business. Professional and business service sectors were the least bothered by the tariffs with only 21% saying they would be affected.
