The President repeatedly claims that his tax increases on trade are absorbed for foreigners.
Yet this table shows the opposite is true. Americans are bearing between 86 percent and 94 percent of the burden.
The table comes from some new research published by the New York Federal Reserve.
Here are some excerpts from the study, which was authored by Mary Amiti, Chris Flanagan, Sebastian Heise, and David E. Weinstein.
Tariff incidence is the technical term for how the costs of a tariff are split between foreign exporters and domestic importers. While importers pay the duty, the “economic burden” of the tariff can be shifted onto exporters if they lower their export prices. …Because tariff incidence hinges on how tariffs affect export and import prices, we now focus on estimating the impact of tariffs on these prices. We follow the approach used in our previous study, which analyzed the effect of the 2018-2019 tariffs on prices for goods exported to the U.S. …We now conduct the same analysis for the 2025 tariffs, covering twelve-month changes from January 2024 through November 2025… Our results show that the bulk of the tariff incidence continues to fall on U.S. firms and consumers. …We highlight two main results. First, 94 percent of the tariff incidence was borne by the U.S. in the first eight months of 2025. This result means that a 10 percent tariff caused only a 0.6 percentage point decline in foreign export prices. Second, the tariff pass-through into import prices has declined in the latter part of the year. That is, a larger share of the tariff incidence was borne by foreign exporters by the end of the year. In November, a 10 percent tariff was associated with a 1.4 percent decline in foreign export prices, suggesting an 86 percent pass-through to U.S. import prices.
For what it’s worth, I’m not overly fixated on who bears the burden of trade taxes.
What concerns me is that trade barriers are sort of like regulations in that they create barriers to economic efficiency.
Regardless of whether trade taxes are borne by buyers or sellers (or whether regulations are borne by consumers of producers), the economy is burdened by “clutter.”
Clutter almost always leads to lower income.
Clutter almost always leads to fewer jobs.
Clutter almost always leads to less growth.
In other words, the direct burden of the tax is important, but it’s also important to consider the indirect costs to the economy. Indeed, these indirect costs are the ones that affect living standards.
I’ll close by stating that incurring costs may be worthwhile if some offsetting benefit is being obtained. But that’s not the case with Trump’s trade taxes. We get the negative of economic inefficiency along with the negative of more money for politicians.
P.S. I have acknowledged that some trade barriers can be justified, but those exceptions don’t apply to what Trump is doing.
