The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
Tariffs — and uncertainty over them — are forcing up costs for businesses in Ohio and parts of three other states, according to market surveillance published last week by the Federal Reserve Bank of Cleveland. At least some of those costs are being passed on to customers, the report said.
The news comes as recent polls show that voters strongly disapprove of the way President Donald Trump, the author of huge new tariffs, is handling the economy.
The Cleveland Fed represents the Federal Reserve System’s Fourth District — a region that covers all of Ohio and parts of Pennsylvania, Kentucky and West Virginia. Eight times a year, it conducts interviews and online questionnaires with businesses, community organizations, economists and other sources.
The Beige Book report released last week said those sources “continued to suggest flat business activity in the Fourth District in recent weeks, and they expected activity to remain flat in the months ahead. Retailers noted a pullback in consumer spending, and manufacturers said that ongoing economic and trade policy uncertainty continued to dampen demand for their goods. Demand for professional and business services increased driven by higher demand for consultations amid the shifting regulatory environment.”
A tariff is a tax on imports that is sometimes imposed to foster domestic industry. Sometimes they’re imposed in retaliation against perceived unfair practices by trading partners, such as China.
Since taking office, Trump has announced a bewildering array of on-again, off-again tariffs, including 50% ones on steel and aluminum that took effect last week.
The Consumer Price Index grew at a relatively moderate 2.4% in May, but the New York Times pointed out that it reflects only the initial impacts of the tariffs. While many of Trump’s tariffs have been delayed or are just beginning to take effect, the Cleveland Fed report said their effects are being felt.
“On balance, contacts indicated that nonlabor input costs rose at a robust pace in recent weeks, continuing an upward trend that began after a period of stability in 2024,” it said. “Contacts from multiple sectors noted that tariffs were now increasing the costs of materials that they import. Some contacts also noted secondary impacts of tariff-related cost increases from domestic producers. For example, one manufacturer said that their U.S.-based raw materials suppliers raised prices to factor in the overtime needed to meet increased domestic demand.”
It added that its sources of food and hospitality information voiced relief over dropping egg prices. But they “generally expected costs to grow at a strong pace in the coming months.”
More of the fed’s sources said they increased prices than did in the previous reporting period. Some blamed tariffs.
“Contacts across industries, particularly those in manufacturing and construction, said that they raised prices to cover costs related to tariffs and to elevated prices of materials such as steel,” the report said. “Auto dealers generally mentioned raising prices of new and used vehicles, and one said that they were offering less discounting because of higher demand.”
Some of that demand, the report said, was from consumers trying to buy vehicles now because they anticipate higher prices in the future.
The news comes as Ohio has the nation’s sixth-highest unemployment, consumer confidence remains relatively low, and Americans disapprove of Trump’s handling of the economy.
A Quinnipiac University poll released on Tuesday said that respondents disapproved of him on the economy by a 16-point margin. The president had an overall approval rating of 38%.
