A study shows that Americans pay 96% of US tariff costs, not the exporters.

Source: Yellow Original Title: Study Shows Americans Pay 96% of US Tariff Costs, Not Exporters

Original Link: A new economic study concludes that the latest round of US tariffs has functioned less as a sanction against foreign exporters and more as an internal tax, with American consumers and businesses absorbing nearly all the cost.

The research published by the Kiel Institute for the World Economy analyzes trade data at the shipment level of over 25 million individual transactions valued at nearly $4 trillion.

The authors conclude that tariffs introduced in 2025 were almost entirely passed on to American buyers, discrediting claims that foreign producers would bear the burden.

Tariffs are Almost Fully Passed on to American Buyers

According to the report, “American importers and consumers bear almost all the cost. Foreign exporters only absorb about 4% of the tariff burden; the remaining 96% is transferred to US buyers.”

Data shows that import prices increase nearly one-to-one with tariffs, a pattern economists associate with an almost complete transfer. Instead of lowering prices to protect their market share, exporters largely held firm.

“Exporters maintained their prices and reduced shipments. They did not ‘eat’ the tariff.”

Export Volumes Fall While Prices Remain Stable

The study includes analysis of tariff shock events directed at Brazil and India, where levies reached up to 50%. In both cases, export prices showed little or no decline after tariffs were imposed.

Instead, trade volumes contracted sharply as exporters redirected goods to other markets.

Customs data from India reinforce the conclusions, showing that exporters facing US tariffs adjusted by reducing shipments rather than accepting lower margins.

The researchers argue that this behavior contradicts the political narrative that tariffs force foreign producers to make concessions.

Customs Revenue Increases, but Households Foot the Bill

While tariffs generated an increase in US customs revenue of approximately $200 billion in 2025, the report emphasizes that this extraordinary income came at an internal cost.

“US customs revenues increased by about $200 billion in 2025, a tax paid almost entirely by Americans,” the authors write.

The study characterizes tariffs as economically equivalent to a consumption tax, whose costs ultimately fall on US businesses and households, rather than on governments or foreign exporters.

More Economic Damage Ahead

Beyond higher prices, the report warns of longer-term consequences, including disrupted supply chains, less variety for consumers, and lower trade volumes.

These distortions, the authors argue, risk hampering productivity and growth over time.

The report adds that the 2025 tariffs represent a self-inflicted economic setback by causing higher prices domestically without imposing significant pressure on foreign exporters.

The conclusions add to a growing body of evidence that protectionist trade policies often undermine internal welfare despite their political appeal.