The economic impact of tariffs imposed by the US administration is disproportionately borne by American businesses and consumers, a recent analysis by the Federal Reserve Bank of New York suggests. This finding stands in contrast to claims that foreign entities absorb the majority of these costs.
Overview of Tariff Impact
Recent reports indicate that approximately 90% of the costs associated with US tariffs are paid by American companies and consumers. This presents a significant economic burden on domestic entities, challenging the assertion that foreign exporters bear the primary financial responsibility. The analysis draws upon data from a period including the initial implementation of tariffs in 2018 and continued application through 2025.
Key Findings from the New York Fed
A report released by the Federal Reserve Bank of New York has presented findings regarding the distribution of costs stemming from US tariffs. The study indicates a clear pattern where the financial weight of these tariffs falls predominantly on American shoulders.
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Cost Pass-Through: The research highlights that tariffs have largely been passed on to US firms and consumers. This suggests that foreign exporters have not significantly reduced their prices to offset the tariff impact.
Magnitude of Burden: The New York Fed's analysis estimates that US businesses and consumers absorb about 90% of the total tariff costs. Some analyses suggest this figure could be as high as 96%.
Historical Parallel: The observed behavior of foreign exporters, not lowering prices in response to tariffs, mirrors patterns seen when tariffs were initially imposed in 2018.
Conflicting Perspectives on Tariff Burden
While the New York Fed report points to domestic absorption of tariff costs, there are differing views and claims regarding who ultimately pays.
The Domestic Burden
New York Fed's Position: The Federal Reserve Bank of New York's study is central to the argument that US entities bear the brunt. Researchers analyzed transactions and price changes to arrive at their conclusions.
Kiel Institute Findings: An independent research firm, the Kiel Institute for the World Economy in Germany, has corroborated these findings. Their analysis of millions of transactions indicated a "near-complete pass-through of tariffs to US import prices."
Impact on Consumers: Tariffs have been likened to a consumption tax on imports, which can reduce the variety and volume of goods available to consumers, thereby increasing their costs.
Administration Claims
White House Stance: The Trump administration has maintained that foreign companies and other exporters shoulder the "lion's share" of tariff costs. They have often touted the economic gains associated with these tariffs.
Challenging the Narrative: Reports, including the one from the New York Fed, undermine these claims. The findings suggest that the stated goal of foreign entities paying for the tariffs has not materialized as expected.
Economic Mechanisms at Play
The study explores the economic dynamics that lead to the observed cost distribution.
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Price Adjustments: Evidence suggests that exporting countries did not lower the cost of goods when tariffs were imposed or increased. This lack of price adjustment by foreign sellers means that the added tariff cost is directly reflected in the prices faced by US importers.
Supply Chain Shifts: The higher costs associated with tariffs have also been noted to accelerate shifts in supply chains. This has led to changes in sourcing away from countries like China towards alternatives such as Mexico and Vietnam.
Broader Implications and Future Outlook
The findings have implications for trade policy and economic strategy.
Policy Rebuttals: Lawmakers have taken steps that could challenge the administration's tariff policies. For instance, the House of Representatives passed a resolution to overturn tariffs on Canadian imports, signaling economic concerns and a political rebuke.
Legal Challenges: The legality of many of President Trump's tariffs is subject to a ruling by the Supreme Court. This ruling could significantly impact the future application of such trade measures.
Consumer Confidence: Rising prices attributed to tariffs have coincided with a dip in consumer confidence, with tariffs cited as a source of anxiety for households.
Expert Analysis
Economists have weighed in on the findings, offering context to the New York Fed's report.
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"US firms and consumers continue to bear the bulk of the economic burden of the high tariffs imposed in 2025."— New York Fed Researchers
"Elevated tariffs on imports were likely to drive up inflation."— Economists' Prediction (as noted in CBS News report)
"In exporting countries like Brazil and India, the price of goods from those countries did not decline."— Kiel Institute for the World Economy Researchers
Conclusion
The New York Federal Reserve's analysis provides robust evidence that US businesses and consumers have absorbed the vast majority of the costs associated with recent tariffs. This economic reality contrasts with the administration's stated position that foreign entities bear the primary financial burden. The findings suggest that tariffs have functioned more like an internal tax, impacting domestic prices and potentially contributing to broader economic anxieties. The ongoing Supreme Court case concerning the legality of these tariffs, coupled with legislative actions, indicates a period of scrutiny and potential change for US trade policy. The observed cost pass-through mechanisms and supply chain adjustments further highlight the complex and often costly nature of such trade measures.
Sources
Financial Times: https://www.ft.com/content/c4f886a1-1633-418c-b6b5-16f700f8bb0d (Summary provided detailed context on the report and its implications.)
CBS News: https://www.cbsnews.com/news/trump-tariffs-consumers-business-nearly-90-percent-new-york-federal-reserve/ (Summary included the White House's defense of tariffs and economist predictions.)
BBC News: https://www.bbc.com/news/articles/c78x9256pn7o (Summary offered details on how goods became more expensive and compared current findings to 2018.)
Retail Dive: https://www.retaildive.com/news/us-companies-consumers-bear-90-percent-tariff-costs-new-york-fed-imports-trade-trump/812186/ (Summary discussed tariffs acting as a consumption tax and mentioned the goal of reviving domestic manufacturing.)
Business Standard: https://www.business-standard.com/world-news/us-companies-paid-nearly-90-of-2025-tariff-costs-says-ny-fed-study-1260213000961.html (Summary provided specific data points on cost pass-through and supply chain shifts.)
Semafor: https://www.semafor.com/article/02/12/2026/us-consumers-shoulder-tariff-costs-ny-fed-says (Summary highlighted the report undermining Trump's claims and noted a symbolic vote by lawmakers.)
Ground.News: https://ground.news/article/ny-fed-90-percent-of-punitive-tariffs-pay-us (Summary emphasized the contrast between Trump's claims and Federal Reserve officials' statements on price increases.)
Stocktwits: https://stocktwits.com/news-articles/markets/equity/americans-bear-the-brunt-of-trump-tariffs-as-per-ny-fed-report/cZRTtkCR4rt (Summary stated that the full burden fell on the US and referenced foreign exporters not cutting prices.)
Fortune: https://fortune.com/2026/02/13/new-york-fed-economists-confirm-americans-footing-trump-tariff-bill/ (Summary detailed the discrepancy between Trump's assertions and data, and mentioned the House resolution and consumer anxiety.)
