Americans Footing the Bill for Tariffs, New Study Concludes
Americans are shouldering almost the entire cost of U.S. tariffs, according to fresh research that directly challenges President Trump's repeated claims. The study reveals that foreign producers bear only a tiny fraction of the burden, turning the tariffs into what amounts to a consumption tax on American consumers.
Research Contradicts Presidential Assertions
President Trump has consistently argued that his aggressive tariff policies force foreigners to pay. He deployed these tariffs over the past year as both a revenue tool and a foreign-policy instrument. These assertions strengthened his bargaining position and pressured foreign governments to negotiate deals with the United States.
The resilience of the U.S. economy seemed to support Trump's stance. The country recorded relatively strong growth and moderate inflation last year, even as Europe and other advanced economies struggled with sluggish performance.
German Think Tank Publishes Detailed Analysis
The Kiel Institute for the World Economy, a respected German research organization, published its findings on Monday. The institute analyzed a massive $4 trillion worth of shipments between January 2024 and November 2025. Their research delivers a clear conclusion.
Foreign exporters absorbed merely about 4% of the burden from last year's U.S. tariff increases by lowering their prices. American consumers and importers shouldered the remaining 96%. "There is no such thing as foreigners transferring wealth to the U.S. in the form of tariffs," stated Julian Hinz, an economics professor at Germany's Bielefeld University who co-authored the study.
Tariffs Function as a Consumption Tax
The report emphasizes that the tariffs did not act as a tax on foreign producers. Instead, they functioned as a consumption tax on Americans. Hinz noted that the $200 billion in additional U.S. tariff revenue collected last year "was paid almost exclusively by Americans."
This situation is likely to fuel higher inflation in the United States over time, the researchers warn. The impact of tariffs tends to manifest gradually through increased consumer prices.
Trade Volumes Suffer Significant Impact
The tariffs had a pronounced effect on trade patterns. Facing higher U.S. duties, Indian exporters maintained their prices but drastically reduced shipment volumes to the U.S. by 18% to 24% compared to exports to the European Union, Canada, and Australia.
German exports to the U.S., which had soared in recent years, contracted sharply over the past year. The findings do not suggest a win for Europe, however. The economic strain is mutual.
Other Studies Echo Similar Conclusions
The German research aligns with recent reports from the Budget Lab at Yale and economists at Harvard Business School. These studies also found that foreign producers bore only a small fraction of the tariff costs.
Harvard Business School research indicated that only about 20% of the tariffs translated into higher consumer prices within six months of implementation. U.S. importers and retailers absorbed the bulk of the costs initially.
Why Don't Foreign Producers Cut Prices?
The German researchers explored why foreign producers haven't slashed prices to maintain sales in the lucrative U.S. market. They suggest several possible reasons.
- Exporters may have found alternative buyers in other countries.
- They might anticipate final tariff levels will change and are maintaining prices in the interim.
- The scale of tariffs, reaching 50% or more in some cases, could make selling unprofitable, so they choose not to sell at all.
- U.S. importers often have long-standing relationships with foreign suppliers that are difficult to change quickly.
Future Shifts in Cost Burden Possible
The distribution of tariff costs could evolve over time. Hinz suggested that overseas exporters might absorb more of the tab as U.S. companies find new competing sources for products. The dynamic nature of global trade means the current situation may not be permanent.
Broader Economic Implications
The economic impact of Trump's trade policy remains critically important. The U.S. president is currently using the threat of higher tariffs on Europe as leverage in geopolitical negotiations, including discussions about Greenland.
A separate report from Capital Economics, also published on Monday, warned that threatened tariffs could lower economic output in the eurozone by 0.2% to 0.5% if implemented.
This comprehensive research provides substantial evidence that American households and businesses are the primary financiers of current U.S. tariff policies, contradicting the administration's public narrative.
