U.S. businesses report that tariff policies will likely lead to price increases and labor market impacts in 2026

Key takeaways:

Across the board, U.S. businesses report concern about the uncertainty created by rapid and substantial fluctuations in tariff policy.
Many businesses have already increased prices or have plans to do so, and dwindling inventories will increase pressure on firms to raise prices.
Labor market effects of tariffs—both positive and negative—are beginning to show.

Overview

As 2026 begins, U.S. manufacturers are contending with a varied and uncertain economic environment. Many are weighing growth driven by domestic investments in data centers and artificial intelligence against the deleterious effects of a shifting and loophole-ridden global tariff environment. Tariff-impacted manufacturers, particularly in the transportation equipment sector, employ substantial numbers of U.S. workers and are often major economic pillars of the communities where they operate. As such, these firms’ tariff-related decisions on investment and hiring stand to have a major impact in 2026 and beyond.

Predicting the effects of the Trump administration’s new tariff policies on U.S. workers, consumers, and businesses has thus far been difficult. Recent research from economists at Harvard University and the University of Chicago shows that the tariff rates actually paid by U.S. importers is meaningfully lower than nominal tariff rates established by trade policy, reflecting the sheer complexity of the current tariff regime and the possibility of widespread tariff evasion.

Disentangling the effects of tariffs from other major economic drivers—the AI and data center boom, immigration crackdown, rollback of Biden-era industrial policy, and elimination of electric vehicle tax credits and other climate policy—is likewise extremely challenging. Equitable Growth’s own quantitative tariff project has sought to estimate the future costs of tariffs on U.S. industries but is currently limited by the use of nominal policy rates and by the difficulty in capturing the administration’s complex tariff-layering scheme.

Yet a review of recently released qualitative information from tariff-impacted businesses can shed some light on current and future tariff costs, as well as discussions of firm-level responses to tariff pressures. The two primary qualitative sources reviewed in this column are corporate filings through the third quarter of 2025, made public through the U.S. Securities and Exchange Commission’s Electronic Data Gathering, Analysis, and Retrieval portal, and the Federal Reserve’s Beige Book publications throughout 2025.

SEC filings show many U.S. firms revised their tariff cost estimates throughout 2025

How firms report they have responded to the Trump administration tariffs could be economically positive—for example, the policies resulted in some firms boosting investment in U.S. production to mitigate tariff costs and improve supply chain resiliency. Firms alternatively could report negative responses to the tariffs, such as increasing prices or laying off workers to contain costs associated with tariffs.

In October 2025, for example, U.S. automaker Stellantis (which was formed when U.S. auto giant Chrysler merged with European car companies Fiat and PSA Group in 2021) announced a $13 billion planned investment in the United States to create more than 5,000 new jobs and boost its U.S. output by 50 percent. While the company did not explicitly mention trade policy in its press release announcing the plan, its CEO said in a late October earnings call that its strategy of expanding its U.S. footprint has “a positive side effect to reduce exposure against tariffs.” Investors and the United Auto Workers union more directly attributed the decision to tariff pressures.

Stellantis’ projection of tariff costs changed over the course of 2025 as it contended with rapid swings in U.S. trade policy. In a July 2025 report, Stellantis estimated its tariff bill in the first half of the year at roughly 300 million euros (about $354 million at the contemporaneous exchange rate), projecting annual costs of up to 1.5 billion euros—a meaningful hit, compared to the company’s reported FY2024 net profit of about 5.5 billion euros. In third quarter documents, however, Stellantis downwardly revised its projected annual tariff cost from 1.5 billion euros to 1 billion euros and said the firm is prepared to “manage this new variable of our business equation.”

Other major transportation manufacturers similarly adjusted their tariff cost projections throughout the year. In an early May 2025 filing to the U.S. Securities and Exchange Commission, U.S. automaker Ford said it incurred about $200 million in tariff costs in the first quarter of 2025 and projected annual net costs of $1.5 billion. In a filing covering the second quarter of the year—the first filing period after the White House’s Liberation Day announcement of 10 percent across-the-board tariffs—Ford reported $800 million in quarterly tariff costs and increased its annual net cost projection to $2 billion. In its third quarter SEC filing, Ford reported $700 million in tariff costs and cut its annual projection to $1 billion, citing expected refunds under an import adjustment offset program created by the White House. That projection is meaningful in comparison to Ford’s FY2024 reported net income of about $5.9 billion.

U.S. automaker GM’s estimates of annual tariff costs likewise fluctuated throughout 2025. In a first quarter SEC filing, GM projected an annual tariff impact of up to $5 billion; a third quarter filing revised that projection down to $4.5 billion, citing the same import adjustment offset program that Ford also cited. Caterpillar, which produces heavy transport equipment for construction and manufacturing firms, initially projected annual tariff costs of up to $1.5 billion before upwardly revising that estimate to $1.75 billion in the third quarter. Other transportation equipment firms, including Lockheed Martin and John Deere, provided regular updates on tariff costs as they were incurred during the year, citing impacts of $350 million and $600 million, respectively.

All these firms, and many others, discussed tariff costs in qualitative terms in their SEC filings, describing the trade policy environment as “highly dynamic,” “fluid,” and “difficult to predict.” Several filings mentioned plans to mitigate tariff costs, including this instructive paragraph from Lockheed Martin’s 2025 Q3 filing detailing the limitations of mitigation efforts:

We are pursuing available options to fully or substantially mitigate the impact of the increased tariffs or any future tariffs, including seeking exclusions, through drawbacks, refunds, recovering the costs in the pricing of our products, securing alternative sources of materials or products, or, in certain cases, qualifying for duty-free treatment. However, these actions may not be successful in fully or substantially mitigating the impact of tariffs, and, even if successful, there could continue to be a near-term volatility in cash flows due to the timing of when tariffs are paid compared to when such costs may be refunded or recovered.

The Fed’s Beige Book reveals how tariff uncertainty affects U.S. firms’ planning for the future

The second valuable source of qualitative discussion of tariff costs comes from the Federal Reserve’s Beige Book, published eight times annually in advance of Federal Open Market Committee meetings. The Beige Book contains anecdotal references to economic conditions across the Fed’s 12 districts, collected through interviews with business leaders and market experts.

In the late April Beige Book, as White House tariff policy was beginning to come into focus, firms expressed pessimism about the future, with some producers planning to pass through tariff costs to consumers and shortening pricing windows for other business clients in response to both existing and anticipated tariffs. Manufacturers in particular complained that tariffs were not only hurting consumer demand and pushing up prices but also complicating future business planning. Some firm planning moved away from efficiency-improving capital investments toward a focus on mitigating tariff costs.

Most Beige Book discussion of business responses to tariffs focused on price increases and supply chain adjustments, but some labor market impacts began to show as the year progressed. The August Beige Book, for example, mentioned firm behavior in the Philadelphia region to “adjust both workforces and prices in response to tariffs.” The October publication mentioned one manufacturer based in the Boston region laying off workers “to offset tariff-related cost increases.”

The August publication also mentioned dwindling inventories among some tariff-impacted businesses, meaning input costs could rise and soon force price pass-throughs to customers—which thus far have been relatively modest.

All of the Fed’s Beige Book publications this year mentioned uncertainty as a core feature of U.S. tariff policy. This uncertainty broadly complicates the ability of firms to follow through on investment strategies—despite some headline-drawing positive decisions such as the aforementioned $13 billion Stellantis U.S. expansion plan.

Conclusion

Rapid fluctuations in trade policy over the course of 2025 brought a high degree of uncertainty to U.S. businesses, particularly for tariff-impacted manufacturers and their downstream business clients. SEC filings covering the full breadth of 2025 are due to be submitted by major manufacturers—including the big employers in transportation equipment and automakers—in the coming months, providing a more complete look at tariff costs throughout the year and the strategies firms actually used to mitigate them, as well as projections for the trade policy environment in 2026.

If the discussions in SEC filings and other qualitative sources are any guide—and evidence suggests quantitative and qualitative information in corporate filings are predictive of firm outcomes—substantial prices increases and even labor market impacts are more likely in 2026 if White House trade policy continues along its “highly dynamic” path.

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