Americans Paying The Cost Of Tariffs — Not Foreign Exporters
Americans, not foreigners, are paying nearly all the cost of U.S. tariffs, according to a new German study. The data undercuts President Trump’s repeated claims that foreign exporters will foot the bill.
BY THE NUMBERS: There was a $200 billion increase in U.S. tariff revenue last year. The researchers say 96% of those U.S. tariff costs are being absorbed by American consumers and businesses, meaning Americans paid at least $192 billion extra for goods coming from overseas than the year before.
The Budget Lab at Yale and economists at Harvard have reached similar conclusions.
Yale estimates that 60–80% of new tariffs end up hitting consumers through higher prices, while businesses absorb the rest.
Trump has used tariffs as foreign-policy leverage, recently threatening to slap new tariffs on imports from European allies because they haven’t supported Trump’s interest in Greenland. It comes as Americans now face an average effective tariff rate of more than 14%, the highest since 1934.
BIGGER PICTURE
Julian Hinz, a co-author of the study, told The Wall Street Journal that exporters could absorb more of the costs if U.S. companies find alternative suppliers — essentially, creating competition.
Why aren’t foreign companies cutting prices now? The Kiel Institute study suggests many exporters have found other buyers, expect tariffs to change, or can’t afford to lower prices without breaking long-term supply contracts.
Over time, Hinz expects the tariffs to push U.S. inflation higher.
Inflation held at 2.7% in December, remaining above the Federal Reserve’s 2% target.
Bottom line: Trump’s tariffs have acted like a consumption tax on Americans, not other countries. We are still waiting on the Supreme Court to rule whether it’s even legal for the president and executive branch to impose tariffs, something the Constitution says is Congress’s job.
“If we lose the case, it’s possible we’re going to have to do the best we can in paying it back,” Trump said Tuesday at the White House. “We’re watching it closely, but tariffs have given us tremendous national security and significant revenue.”