“We try to hold the line. But by the time we get to the bottom of the pallet, the next one’s already more expensive.”
She doesn’t use the word “pass-through.” She just says: “The shelf doesn’t lie.”
Back in Portland, Nancy looks at the schedule. One of her weekend baristas just put in notice. Rent is up. Her coffee supplier switched shipping ports. Her landlord sent a “market adjustment” letter. She opens the cash drawer. Pete finally bought a pastry with his refill.
She smiles.
“Perishables move fast. Autos take a model year.”
Kelley Blue Book says tariffs could add $2,000 to $15,000 to new vehicles depending on where they’re assembled. Automakers are eating the cost—for now. But the 2026s start hitting in September. Powell said businesses are already signaling price moves. The inventory buffer’s gone.
At an auto lot outside St. Louis, the manager shrugs at the window stickers.
“This year we lost the rebates. Next year we lose the price floor.”
He nods toward a white sedan.
“That car? $28k today. $32k easy by Christmas. Unless you’re buying cash, most people won’t notice. But they’ll feel it.”
The inflation metrics are moving. The Cleveland Fed projects core CPI at 3.05% for August. The CBO says tariffs will add 0.4 points to inflation over the next year. But that’s not what shoppers see. They don’t see 0.4%. They see the drip coffee that’s now $3.59 instead of $3.25. They see fewer refills. Smaller chocolate bars. A second-hand car instead of a new one.
“Tariffs don’t hit like a storm; they seep like a leak. By the time the floor is wet, the ceiling’s already cracked.”
Nancy rewrites the board again. The price moves from $3.49 to $3.59. She doesn’t write a reason. She just adds a new note at the bottom: No refills on to-go orders.
The chalk squeaks. The Sharpie is almost out of ink. She wipes her hands on her apron and glances at the euro.
The bell rings. A customer walks in.
She hands over a cup without commentary. Just a quiet smile.
Bibliography
1. Federal Reserve Board, FEDS Note (May 9, 2025) . Provides real-time analysis showing that consumer-goods price increases from the 2025 tariffs are already visible in scanner data, consistent with “full and quick” pass-through seen during the 2018–19 tariff round.
2. Maurice Obstfeld, Peterson Institute for International Economics (April 2, 2025) . Warns that the 2025 tariff framework constitutes a direct hit to U.S. real household income and is unlikely to correct trade imbalances—describing the policy as “designed for maximum damage—to America.”
3. Campa, Goldberg, Marazzi & Sheets, various Federal Reserve and IMF studies (2005–2024) . Establish the classic 25–40% exchange-rate pass-through into U.S. import prices, with more recent IMF and BIS-linked research showing pass-through intensifies under high uncertainty and elevated inflation.