(Reuters) - Worries over tariffs have steadily mounted among U.S. companies this year, based on the Federal Reserve’s latest “Beige Book,” a summary of the state of business across the central bank’s 12 regional districts.
The October Beige Book, at 32 pages, includes 51 instances of the word “tariff” or its derivations. Nearly all of the Fed’s regional districts made reference to tariffs in their individual reports, with St. Louis as the sole exception.
Several retailers, particularly auto dealers, expressed concern about rising costs from tariffs and resultant price increases for consumers. Companies also reported effects on supply chains, as businesses increased orders in anticipation of import tariffs going into effect.
Mentions of tariffs first surged in the April Beige Book, which featured 36 such references as U.S. companies grappled with the effects of 25 percent duties on imported steel and aluminium announced in March. The May Beige Book included 22 references to tariffs. The July edition had 31 such instances, and the September edition had 42.
In Beige Books over the preceding two decades, tariffs had been mentioned only 20 times. Before April, tariffs had not been mentioned more than twice in a single Beige Book going back to October 1996, the furthest back the Fed catalogues the full reports on its website. The Beige Book is published eight times a year.
The word “tariff” or its derivations have now appeared 186 times in the Beige Book since Republican Donald Trump became president in January 2017. Under his predecessor, Democrat Barack Obama, they were mentioned twice.
Tariffs made 14 appearances in Beige Books issued during Republican George W. Bush’s term. Bush imposed tariffs on imported steel in the spring of 2002 and lifted them at the end of 2003, and most of the references to duties appeared around that period.
The following are selected passages from the newest Beige Book attributed to business contacts in Fed districts around the country:
“Port traffic in Boston increased this past summer as retailers accelerated imports to avoid tariffs that were slated for the fall.”
“Three manufacturing firms faced higher input prices due to tariffs on Chinese goods and services that were not readily substitutable, and the firms expected to pass on (or had already passed on) to consumers at least some of the tariff burdens.”
“A few contacts in manufacturing and distribution cited tariffs for driving up costs and inducing them to raise their prices.”
“Dealers expressed ongoing concerns about rising interest rates and potential tariff impacts on new car prices.”
“Other firms reported difficulty meeting the prices of foreign competitors who are not exposed to tariffs on the primary input commodities of their products.”
“Construction contacts reported increases in prices for LED lighting, concrete, steel, lumber, and copper. The majority of contacts attributed at least some of these increases to import tariffs. One trucking contact noted that prices for pallet jacks, tires, and packaging material were higher because of the tariffs.”
“Port contacts attributed some of the export decline to the recent tariffs on American goods and believed that imports remained strong because orders were placed early, in anticipation of tariff increases.”
“Regarding recently imposed tariffs, many energy contacts shared that their businesses had responded by reorganizing supply chains.”
“Hog and dairy prices recovered some, boosted in part by US government purchases that were part of a program to compensate farmers for losses from higher foreign tariffs. Even so, dairy farmers continued to struggle. In addition, contacts viewed gains from the new US-Mexico-Canada Agreement as too small and too far in the future to help dairy farmers. Moreover, Canada and Mexico maintained their tariffs on agricultural goods (including pork and dairy) that they imposed in response to US steel and aluminium tariffs.”
“Most contacts indicated that higher US and foreign tariffs had not affected their capital spending schedules; among those who had reacted to tariffs, more said that they were slowing spending than increasing it. In addition, some contacts indicated that they were delaying capital spending decisions until the outcomes of trade negotiations were more clear.”
“A producer of dry beans reported that a large regular annual order from European Union countries was cancelled due to tariffs.”
“Price pressures remained elevated in part due to tariffs, particularly in manufacturing and retail. Among manufacturers, roughly 60 percent of contacts said the tariffs announced and/or implemented this year have resulted in increased input costs. The share was even higher among retailers, at 70 percent.”
“Many manufacturing respondents noted savings due to federal tax cuts, but a majority of respondents also noted negative impacts from tariffs, primarily due to higher input prices.”
“Several contacts noted a moderate pickup in price growth for metal inputs due mostly to the continued impact of tariffs.”
Reporting by April Joyner; additional reporting by Dan Burns; Editing by James Dalgleish and Tom Brown