U.S. companies and consumers have paid almost all of the cost of the tariffs imposed on imports by President Trump over the last year, according to a new analysis by researchers at the Kiel Institute for the World Economy in Germany.
The analysis, which strongly contradicts claims by Trump and his staff that foreign firms cover the cost of the tariffs, indicates that U.S. companies and consumers have paid 96% of the cost.
Researchers came to that conclusion after analyzing more than 25 million shipment records, representing an economic value of more than $4 trillion. Those imports generated about $200 billion in customs revenues — the tariff revenue surge that Trump has cited when promising refund checks to Americans, as well as a means to reduce the budget deficit and national debt.
But that revenue surge is coming largely out of American pockets. The researchers found that import prices fell by only 4% after the tariffs were imposed, indicating that foreign firms were absorbing about 4% of the higher cost. That leaves U.S. firms and consumers swallowing the other 96%.
To test their conclusions, the researchers also looked specifically at imports from Brazil following Trump’s imposition of a 50% tariff and India following Trump’s imposition of a tariff ranging from 25% to 50%. In both cases, the prices of goods remained the same, even as trade volumes fell by 18% to 24%. Since prices didn’t budge, the researchers conclude that all of the higher cost imposed by the tariffs was paid on the U.S. side of the ledger.
Implications of the analysis: The researchers say the analysis clearly shows that tariffs are a tax on American consumers. As a domestic tax, they do not transfer wealth from foreigners to Americans but instead transfer wealth from U.S. companies and consumers to the U.S. Treasury. The main adjustment to the tariffs occurs through trade volumes, which fall as the tariffs raise prices. Those more costly goods then work their way through the U.S. supply chain, raising prices for domestic producers and end users.
“The tariffs are an own goal,” said co-author Julian Hinz, Research Director at the Kiel Institute, using a soccer term that refers to mistakenly scoring points for the opposing team. “The claim that foreign countries pay these tariffs is a myth. The data show the opposite: Americans are footing the bill.”
The bottom line: “Foreign exporters did not meaningfully reduce their prices in response to U.S. tariff increases,” the report concludes. “The $200 billion surge in customs revenue represents $200 billion extracted from American businesses and households.”