Nick Friedman, co-founder of Tampa-based College Hunks Hauling Junk and Moving, says his business has been facing multiple headwinds. High mortgage rates have dampened the real estate market, while rising insurance premiums are eating into operating costs. Now there's the U.S.-Iran war and a surge in diesel fuel prices that is eating into profit margins. Yet, he doesn't feel like he can raise prices. 

"We are in a bit of a Catch-22," said Friedman. "Our fear would be if we start raising prices it will hurt our customers."

Bigger companies, he says, can probably get away with adding fees. As rapidly rising fuel costs are cascading across the American economy, that is exactly what some are doing.

United Airlines and JetBlue both raised prices on baggage this week. Amazon announced a 3.5% "fuel surcharge" on sellers.

Amazon described the surcharge as "meaningfully lower" than levies applied by other major carriers in a statement to CNBC. JetBlue said as operating costs rise, it "regularly evaluates how to manage those costs while keeping base fares competitive and continuing to invest in the experience our customers value."

For Friedman, that evaluation isn't easy. "If you have to fly, you have to fly," he said.

But as Friedman's moving company considers whether to raise prices, "I don't know that we have that luxury," he said. Customers can choose to trade down to a moving service that is cheaper and maybe less protected, or even assemble some buddies with pickup trucks to help with a move, leaving Hunks' 2,000-truck fleet increasingly idle. But filling up the trucks with gas is also an expensive proposition. 

Friedman says that historically, fuel has taken 3 to 5 percent of revenue as an expense line item, but has doubled to 6 to 10 percent since the war started. "It is very difficult from a business perspective," Friedman says. Hunks runs on a franchise model with over 200 locations, putting many franchisees in precarious positions. 

While Friedman's business is uniquely exposed to the war with its reliance on trucking, higher diesel and jet fuel prices are about to hit a lot more businesses. 

"Discretionary spending is typically where the cycle starts. Consumers pull back from items which are discretionary first," said MassMutual Wealth chief investment officer Daken Vanderburg. 

Vanderburg says higher energy prices act as a tax on consumers because they ripple across so many goods and services. If the war and its disruption is short, consumers will dip into savings and weather the higher costs. But a longer-duration conflict will cause consumers to cut back. "That slows growth and hits spending, and does it quite quickly," Vanderburg said. 

While many in the market were expecting President Donald Trump's speech to the nation earlier this week to outline an end to the war, his words left the timeline unclear and the market unsettled.

Unlike past economic shocks to the system, such as the Great Recession or Covid, there will be fewer tools for the government to use to lessen the blow for businesses and consumers. "Policy is likely not riding to the rescue like it did during the Covid era," Vanderburg said.

The Federal Reserve is caught in its own conundrum. The central bank has not indicated any greater likelihood it will ease rates to stimulate the economy, given the risk it could push inflation higher. In fact, the market was recently betting the Fed would be more likely to raise rates given the surge in oil prices. But Fed Chair Jerome Powell also indicated this week he saw no reason to consider a rate hike, noting short-term oil shocks are usually a factor that central banks look past when analyzing inflation and longer-term inflation expectations remain well anchored.

A price shock across the board

The U.S. economy, more so than economies in many other countries, is propped up by consumer spending, with almost two-thirds of the economy powered by consumers. Where those dollars go will dictate where the economy goes, Vanderburg said. While the economy had been slowing even before the outbreak of war, he says there is one cushioning factor for the American consumer compared to the oil crisis of the 1970s, a country that is far less dependent on imported oil. But he added that cushion can only soften the blow. 

"This is headed toward sustained, compounding cost pressure across every industry that touches fuel, which is effectively every industry," said Herman Nieuwoudt, president of IFS Energy & Resources. 

Nieuwoudt says what we're seeing right now isn't a single price shock. 

"It's the consequence of the largest energy supply disruption in modern history layered on top of six years of structural volatility," he said. "These disruptions cascade through manufacturing, packaging, agriculture, transportation, and retail in ways that take months to fully materialize," he added.

Costs will rise across the board, and the companies that can see disruption coming, adapt their operations in real time, and make faster decisions about where to allocate resources will weather this far better than those still running on quarterly planning cycles. But he added that companies relying purely on surcharges without addressing their own operational efficiency are on borrowed time — probably two to three quarters before customers and competitors force a reckoning. 

For consumers, Nieuwoudt says the pain at the pump is first, but that is only the beginning. Higher costs will gradually show up across airfares, groceries, shipping costs, and manufactured goods. 

Economists say the existing K-shaped economy is about to get a twin phenomenon, with the indispensable (airlines, car repairs) and the giants (JetBlue, Amazon) having more latitude to raise prices, whereas smaller businesses and discretionary services are caught in a vise between raising prices and turning off customers, or keeping prices down while sacrificing margins. 

Higher airfares should not be a surprise. Delta Air Lines CEO Ed Bastian told CNBC several weeks ago that given current demand, there is room to raise fares as a response to higher oil prices if needed. "Even with the war going on, our revenues, our bookings are up 25% year over year," Bastian said. In early March, United CEO Scott Kirby told CNBC higher airfares were likely on the way to cover rising fuel costs.

"American consumers are resilient and the current situation is no exception," said Federico Bandi, a professor of economics and finance at the Johns Hopkins Carey Business School.

Other brands may not be as fortunate as the airlines with demand and pricing momentum. Bandi says there has been a shift away from discretionary spending towards necessities, and within necessities, there is an accelerating shift from brand names to generic products. 

"A prolonged equilibrium in which companies attempt to pass unusually large energy costs (or pervasive tariffs) onto consumers will not be sustainable. The persistence of the current shocks, and companies' readiness to re-adjust prices when costs return to some degree of normalcy, will be central to consumers' confidence and their future decisions," he said. 

Economic vulnerability from import tariffs, government shutdowns, and rising health care costs, among other policy changes, lead Fernando Lozano, a professor of economics at Pomona College, to conclude that "patience is very short" and consumers will have very little tolerance for new fees. 

The shipping sector economics may be a major test, and consumers may have to choose what matters more: paying more for faster service or saving money by waiting for an order. 

"We are seeing the end of the 'fast and free' shipping era as a default expectation. The current disruptions are forcing a reset, and what's emerging is a model based on choice and value," said Josh Steinitz, chief strategy officer at shipping and fulfillment software company Auctane. Steinitz says the current crisis is pushing both businesses and consumers to reconsider the true cost, and worth, of getting a product to a doorstep.

The United States Postal Service has asked for an 8% surcharge for package and express deliveries. 

The best way to think of a fuel surcharge, according to Steinitz, is as a "volatility tax" on shipping. 

"It's how carriers manage unpredictable oil prices, but for a small business, it feels like a new, unavoidable cost that appears on every single shipment they send," Steinitz said. As opposed to the stability it provides the carriers with, "when small business owners see the fee on their invoice it feels less like a shock absorber and more like a direct financial impact they have no control over," he said. 

This leaves business owners and consumers in a vise. 

Friedman thinks wistfully of his days starting Hunks with his friends and an old cargo van at the dawn of the Great Recession. "At that point, we were a scrappy start-up, and it forced us to become resourceful and gritty," Friedman said. He says the company will now have to rely on some of that same grit, but with 2,000 trucks to fuel up, and less room to shift margins and pricing, it feels different right now. "It's pinching everyone," he said.