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A new study has found that price increases implemented by companies during tit-for-tat trade escalation between the U.S. and China far exceeded the levels that the duties themselves would have justified. The report from researchers at the marketing services agency Growth Bite found that prices rose significantly during the six-week period in April and May when both tensions and tariffs peaked—“weeks before any tariffed goods could reach store shelves.” Lead researcher Adomas Šulcas told Newsweek that the timing and magnitude of the price hikes provided “compelling evidence that retailers used the announcement as a pricing opportunity beyond what supply-side pressures alone would predict.” Why It Matters Many companies have this year said they will be raising prices as a direct result of President Donald Trump‘s tariffs. The White House has pushed back, arguing that larger businesses have sufficient margin space to accommodate the import taxes without affecting consumers—a growing number of whom are already grappling with affordability issues. The report provides offers insight into these dynamics, how retailers respond to tariff announcements, and the extent of price pass-through that can be expected in any future escalation. However, the researchers note that “while a corporate greed narrative may seem enticing, our findings are just as important to policymakers,” and conclude that the high visibility of tariff escalations “may harm consumer welfare more than tariffs themselves.” What To Know Researchers analyzed 1,900 consumer products and tracked prices across 19 product categories—100 per category—from September 2024 to August 2025. The longer scope provided a benchmark to examine price changes during the period when trade tensions between the U.S. and China were at their highest—between Trump’s “Liberation Day” announcement on April 2 until the eventual suspension of the 145 percent rate on Chinese imports following a truce in mid-May. “For consumers, the implications were significant,” the researchers wrote. “During the six-week trade war period, shoppers paid elevated prices on pre-tariff inventory, transferring wealth to retailers as windfall profits rather than to governments as intended tax revenue.” The report found “statistically significant preemptive price increases” over the period in question, with average increases of 1.8 percent per two-week stretch, which accelerated to over 2 percent, compared to a 0.4 percent baseline. “Reciprocal tariffs seem to incentivize retailers to exploit ‘trade war’ narratives for margin expansion,” the report read. “Businesses raise prices immediately upon retaliation announcements, despite holding inventory purchased at pre-tariff rates and with additional tariff-exempt stock already in transit.” Not only did biweekly price increases accelerate, they ended up affecting nearly 43 percent of products. “That indicates that not only did the Liberation Day effect affect prices themselves, but that more products than usual were affected, meaning more retailers increased prices, at a faster pace, and on a larger number of products than in any other period we analyzed,” said Šulcas. Šulcas told Newsweek the team considered “several counterfactual options” to explain the outsized fluctuations, including a higher baseline, the level of imports from China and the seasonality of demand, but that “none of these provided sufficient explanations for the price surge.” Customers shop for produce at a grocery store on February 12, 2025 in Austin, Texas. (Photo by Brandon Bell/Getty Images) The findings back up those from a Fed Beige Book report and a survey from the New York Federal Reserve, published in May, which found that a “significant share” of companies were raising prices on goods and services “unaffected by the tariffs.” “A heavy construction equipment supplier said they raised prices on goods unaffected by tariffs to enjoy the extra margin before tariffs increased their costs,” one section of the Beige Book report read. However, the researchers noted that the “manner” of tariff announcements—their “unprecedented scope, high visibility, and explicit ‘trade war’ framing”—had helped to create conditions “where widespread price increases faced minimal competitive pressure.” “Overall, it is clear that high-profile, politically charged tariff announcements produce bigger and faster price hikes than quietly implemented policies,” concluded Šulcas. “The way trade policies are announced may harm consumer welfare more than tariffs themselves, and should be considered in the future.” What People Are Saying The report read: “High-visibility trade war threats, whether eventually implemented or not, create perverse incentives for businesses to engage in profit-maximizing behavior, harming consumer welfare more than quiet policy implementation.” What Happens Next As Šulcas not...
