April 24, 2025
In cities – both large and small – across the country, businesses are stressing over how rising costs will affect their customer flow.
A report from the Federal Reserve revealed that businesses are already seeing increased costs due to President Donald Trump’s tariff wars to consumers, CNBC reports.
The report, known as the Beige Book, is released every seven weeks to show the country’s economic growth. The March 5 report revealed that “little changed” but touched on “uncertainty around international trade policy was pervasive across,” including how prices increased following Trump’s April 2 “liberation day,” announcing high tariffs on countries like China. “Firms reported adding tariff surcharges or shortening pricing horizons to account for uncertain trade policy. Most businesses expected to pass through additional costs to customers,” the report read.
“However, there were reports about margin compression amid increased costs, as demand remained tepid in some sectors, especially for consumer-facing firms.”
Companies have reported receiving notices from suppliers about rising costs on Chinese products, and are seeking ways to avoid absorbing the increases while acknowledging uncertainty over their ability to pass them along to customers. “Most Districts noted that firms expected elevated input cost growth resulting from tariffs,” the report said.
“Many firms have already received notices from suppliers that costs would be increasing.”
In cities across the country, businesses are concerned about how rising costs will impact their customer base. In the New York area, the price increases have hit the food, insurance, and construction materials industries the hardest. Manufacturers and distributors have already announced that they have added surcharges due to increased shipping costs. In addition to growing tension with China, there are also warning signs of a brewing trade dispute with Canada.
Tourists are booking fewer hotel rooms in New York City, and a tech firm reported losing business contacts in Canada.
Smaller businesses in small towns are being hit a little harder. DigiKey, an electronic parts supplier based in Thief River Falls, Minnesota, is concerned that a rise in product costs will compel it to make cuts to employee benefits.
“We’re kind of a contrarian, in that we ship around the globe,” DigiKey President Dave Doherty said, according to NPR.
“But every additional shipment into China, or into Germany, or into Japan, or Taiwan, or Bangladesh creates jobs in Thief River Falls.”
Headquartered in a single warehouse in the rural Minnesota town, the company began by hiring farmers’ wives, offering them stable pay and health benefits. Over the years, it has added 3,800 U.S. jobs. However, with Trump’s tariffs, employees like DigiKey’s Vice President of Operational Excellence and Trade Compliance, Teri Ivaniszyn, are nervous about job security.
“I wake up in cold sweats about tariffs,” Ivaniszyn laughs.
Approximately 25% of the company’s wares come from China. The firm has spent $500 million on tariffs implemented during Trump’s first term in office. The difference is that there have always been ways to recoup lost funds. However, the rules are ever-changing during his second term.
“What’s coming next? How are we going to handle it?” she asks.
“The yo-yo effect that we’re having: It’s on, it’s off, this is in, this is out.”
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