Manufacturers around the U.S. are expressing concern about the impact of tariffs on their businesses, a new Federal Reserve report shows.
According to the central bank's latest "Beige Book" report, manufacturers in some parts of the country are reporting higher prices and supply disruptions, which they attribute to the Trump administration's move to impose or threaten tariffs on hundreds of , the European Union and other major U.S. trading partners.
"The U.S. economy was in good shape in the middle of the year, according to the latest Beige Book, but concerns are growing," said Gus Faucher, chief economist with PNC Financial Services Group, in a research note. "Business contacts were concerned about trade as the United States and its trading partners began to implement tariffs, with talk of escalation."
The Beige Book, published eight times a year and based on information the Fed gathers from businesses, details economic conditions compiled by the Fed's 12 regional banks.
Although most analysts say the escalating trade tensions have yet to ripple through the economy, companies in some Fed districts report feeling the effects.
In New York, "A number of manufacturing contacts remarked that tariffs have raised their costs," the report noted. "Moreover, uncertainty about future trade policy was cited as a major concern, particularly in parts of upstate New York, where there is substantial trade with Canada."
In Philadelphia, one machinery manufacturer said that steel and aluminum tariffs imposed by the U.S. earlier this year are boosting prices, disrupting orders and otherwise affecting its supply chain.
Yet while tariffs have pushed up prices for metals and lumber, for now the impact on consumers remains modest, the Fed noted. Recent U.S. economic data also continue to show healthy growth and steady job-creation.
That could change if President Trump carries out his threat to impose duties on an additionaland impose tariffs on foreign-made autos and auto parts.
UBS estimates the recently proposed tariffs on Chinese imports could ultimately cost as many as 200,000 U.S. jobs and dent economic growth.
Fed chief: Halting slowdown could be tough
Federal Reserve Chairman Jerome Powell has said the central bank has ways to mitigate the impact of a trade war on the economy, such as by lowering short-term interest rates if growth slows.
But that could prove difficult if tariffs raise prices sharply, he warned lawmakers this week. In that case, the Fed normally would tap the brakes on the economy by raising rates.
"If we do have higher inflation, that could be very challenging for policy," Powell said Wednesday in addressing House lawmakers his semi-annual update on the economy.