Who is paying for Trump's tariffs? - American companies and consumers are bearing the main "burden"
US companies and consumers are bearing the brunt of new import tariffs. Early data contradicts President Donald Trump's statements and complicates the Federal Reserve's battle against inflation.
Trump had predicted that foreign countries would pay the price of his protectionist policies, believing that exporters would absorb the costs just to maintain access to the world's largest consumer market.
But academic studies, surveys and business comments show that in the first months of the new trade regime, it is American companies that are bearing the cost and partially passing it on to consumers. “The bulk of the cost appears to be being borne by American firms. We have observed a gradual transmission of the cost to consumers and a clear upward pressure,” the analysts explain.
A White House spokesman said that “Americans may face a transitional period due to the tariffs,” but the cost “will ultimately fall on foreign exporters.” Companies are also diversifying supply chains and bringing production back to the U.S., he added.
Researchers tracked the prices of about 360,000 products in brick-and-mortar and online stores in the United States. They found that imported goods have become 4% more expensive since the tariffs were imposed in early March, while prices of domestic products have increased by 2%. The biggest price increases have been seen in goods that the United States cannot produce itself, such as coffee, or that come from countries penalized with high tariffs, such as Turkey.
Although these price increases are significant, they are usually much smaller than the tariff itself, indicating that sellers are absorbing some of the cost. On the other hand, U.S. import prices show that foreign exporters have raised their prices in dollars and passed on some of the cost to U.S. buyers to compensate for the weakening dollar against their own currencies.
This suggests that foreign producers are suffering little from the US tariffs, the researchers say. National export indicators reflect the same reality. The cost of goods exported from China, Germany, Mexico, Turkey and India has increased, with Japan being the only exception.
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