Americans Are the Ones Paying for Tariffs, Study Finds – And It’s Hitting Your Wallet More Than You Think

The Wall Street Journal and Bloomberg contributed to this report.

Most political spin treats tariffs like some magical tax that other countries pay – not Americans. But a new major economic study has turned that idea on its head, showing that almost all of the cost of US tariffs falls on US importers, businesses, and households rather than foreign exporters.

Here’s a closer look at what the research really says, why it matters, and what it means for everyday Americans.

On paper, a tariff is a tax on imported goods – charged at the border when products enter the United States. The Trump administration and its supporters have argued for years that these levies are paid by foreign countries or companies as part of “economic pressure.” But the real world of trade economics tells a very different story.

A new study from the Kiel Institute for the World Economy, based on detailed shipment data covering nearly $4 trillion in trade, found that:

• Foreign exporters absorb only about 4% of the tariff burden – meaning they rarely cut their prices in response to US tariff hikes.
• A whopping 96% of the cost is passed on to American buyers – importers, businesses, and ultimately consumers at the checkout.
• US tariff collections surged by roughly $200 billion in 2025, but that revenue wasn’t a free gift from abroad – it came out of US wallets.

In simple terms: tariffs have become a consumption tax on Americans, not a burden shouldered by foreign producers.

The study highlights an important economic concept called tariff pass-through – how much of a tariff is reflected in the final price paid by consumers:

• When a country like Brazil or India faced a jump to a 50% tariff on exports to the US, their firms chose not to lower asking prices to maintain market share or margins. Instead, exports shrank.
• Because exporters didn’t cut prices, US importers were stuck with the full tariff bill. Those companies then choose between absorbing those costs or passing them along to customers via higher prices.

In many sectors, that cost shows up quietly – tucked into the prices you see at grocery stores, online shops, and retail shelves. For example, other reports have linked tariff-associated price pressures to higher costs for everyday items like coffee, clothes, and electronics.

Economists often distinguish statutory incidence (who legally pays the tax at the border) from economic incidence (who actually feels the cost). In the case of US tariffs, both usually end up affecting Americans – be it businesses that import goods or consumers who buy those products.

You might be thinking:

“Okay, economists always disagree – why should I care?”

But the implications are real and tangible:

1. Cost of Living Has Already Climbed

Reports from analysts and political committees have tied tariff policies to higher consumer prices. In fact, Democrats on the Joint Economic Committee estimated that US households paid roughly $1,200 more in tariff-driven expenses in 2025 alone. That’s real money taken out of family budgets, not abstract statistics.

2. Tariffs Can Be Regressive

Smaller households and lower-income families spend a larger share of their income on goods affected by tariffs – making these taxes feel heavier on those least able to absorb them. Studies have shown that price increases hit essentials like food and clothing disproportionately hard.

3. Business Margins and Competitiveness Are Squeezed

American companies that import intermediate goods (like parts for manufacturing) face higher costs, reducing profitability or forcing price increases that make US products less competitive domestically and abroad.

4. Economic Growth Can Be Dampened

Shocks to trade – like slumping import volumes and higher costs – can slow investment and dampen economic growth, especially when retaliation hits US exports too. Researchers have linked similar tariff surges to weaker GDP performance in some sectors.

Politicians often frame tariffs as a win-win: protect American jobs and make foreign competitors pay for market access. But the evidence suggests that narrative is oversimplified at best and misleading at worst.

For example, President Trump repeatedly claimed during the 2024 campaign that tariffs would be paid by other countries, not Americans. But economic data and the Kiel Institute’s research reveal that those promises don’t hold up under scrutiny.

Tariffs can still have strategic uses – like leveraging negotiations – but if the goal is to shield consumers from higher prices, the current structure is working backward: Americans are footing the bill while policymakers tout foreign burden-sharing.

With the US considering even broader tariffs on goods from several trading partners, the question becomes more urgent: Can the US design tariffs that protect domestic interests without hurting consumers?

Some economists argue that targeted relief, coupled with reciprocal trade measures, might mitigate consumer harm. Others suggest that direct subsidies to affected industries (rather than broad tariffs) could avoid passing costs to households. But any protectionist policy inevitably reshapes economic incentives – and someone, somewhere, ends up paying.

For now, the best evidence suggests the current tariff regime is less of a foreign extractive tool and more of a silent tax on everyday Americans.