Consumers may be shelling out more money for a range of products in the coming months. Many companies are considering raising prices to offset the cost of proposed new tariffs with China.
According to M&T Bank's latest survey of nearly 300 small- to mid-size businesses from Buffalo and across the Mid-Atlantic region, more than three-quarters expect tariff-related cost increases will have a negative impact on the U.S. economy over the next five months and 55% expect their businesses will be negatively impacted.
"I think the public should be aware that these negotiations that we hear and read about aren't just simply rhetoric going back and forth between ourselves and China and others that are involved in the tariff situation; that businesses are going to feel the impact of higher costs as they play out," said Gary Keith, a regional economist with M&T Bank.
Keith says about a quarter of the respondents expect to absorb most or all tariff cost increases. But about one-third have already raised prices and another third are actively considering it. Keith says while inflation numbers don't reflect increasing costs for consumers just yet, about 18% of businesses plan to cut employment levels.
"What tariffs basically are are taxes that increase the price of a good or service and the classic supply and demand is if something becomes more expensive it's less in demand. And so the fear is if there is less demand for a product or service, how do we react to that? And one of the ways to look at that is in employment costs," Keith said.
Despite the concern businesses have, Keith says at this time there is no cause for alarm about a recession because "the economy is still moving forward." But he says, the uncertainty over tariffs is a headwind.