US President Donald Trump has been touting the so-called revenue being brought in by his tariffs while staunchly denying the obvious gap in his logic, that his tariffs are being paid for by Americans, but a new study seems to have proven just that.
The brunt of US tariffs — 96% — have been paid by US buyers, research from the Kiel Institute for the World Economy, a German think tank, found, while about 4% of the tariff burden was paid by foreign exporters.
“American importers and consumers bear nearly all the cost,” the researchers said of the tariffs.
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As per the study, published Monday, said that the $200 billion increase in customs revenue that the US government raised in 2025 was a “tax paid almost entirely by Americans.”
“US import prices rise nearly one-for-one with tariffs, while trade volumes contract,” the study said.
Tariffs are taxes on imported goods, technically collected from U.S. importers, but in practice, businesses usually pass these costs onto consumers through higher prices. Retaliatory tariffs from other countries have also supposedly raised costs for US exporters, further impacting the domestic economy. Economists agree that tariffs rarely force foreign countries to bear significant costs; instead, American buyers usually pay the bulk of the expense indirectly.
The Kiel study said American importers and wholesalers are first hit by the tariff cost, followed by manufacturers and retailers, all of which must choose whether to absorb the tariff or pass it on to their customers, American consumers are then hit by increased prices, both on imported goods or American-made products that use foreign inputs.
The broader significance of these findings extends beyond simple accounting of who pays tariffs. Tariffs are often promoted as tools to protect domestic industries and generate government revenue, but their economic effects are far-reaching and complex. Even when a government collects additional revenue, the costs are frequently redistributed throughout the economy in ways that can burden consumers, distort markets, and create inefficiencies.
When import taxes raise the prices of inputs for domestic manufacturers, it can reduce competitiveness, slow production, and even limit the availability of certain goods. Similarly, higher prices for consumers can suppress demand, reshaping purchasing behavior and potentially slowing economic growth.
Tariffs can also strain international relations, prompting retaliatory measures that affect exports and broader trade networks. These dynamics illustrate that policy measures like tariffs cannot be evaluated solely in terms of immediate revenue gains; their indirect economic impacts often outweigh initial benefits.
Furthermore, the distribution of costs highlights underlying equity questions, as ordinary consumers tend to bear burdens that policymakers may intend to place on foreign actors. In essence, tariff policy demonstrates the interconnectedness of global trade and domestic markets, emphasizing the importance of careful analysis of both direct and indirect effects.
Understanding these broader implications is crucial for policymakers, economists, and the public when assessing the true costs and benefits of protectionist measures.
Beyond immediate economic impacts, tariffs also serve as a lens for understanding how policy decisions interact with broader systems of trade, markets, and consumer behavior.
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They illustrate that government interventions rarely operate in isolation; actions aimed at one sector often ripple through supply chains, pricing structures, and international relationships. The effects of such policies are shaped not only by the size of the tariffs themselves but by market responses, corporate strategies, and global economic conditions.
This highlights the importance of evaluating policy choices holistically, considering both direct outcomes and the subtler, long-term consequences that may emerge. By studying these dynamics, policymakers and analysts can better anticipate unintended effects, balance competing priorities, and design approaches that achieve objectives without imposing undue burdens on ordinary consumers or domestic industries.
In this way, the discussion around tariffs becomes a broader conversation about economic trade-offs, efficiency, and fairness in a globally connected marketplace.