Though I added my own two cents because I don’t actually care that much about who bears the burden of the tax.
I’m more worried about protectionism throwing sand in the economy’s gears. Here’s a brief excerpt of my analysis.
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.”
For today’s column, let’s look at some additional recent research. The Germany-based Kiel Institute published a study last month that investigated the economic impact of Trump’s protectionism.
The report, authored by Julian Hinz, Aaron Lohmann, Hendrik Mahlkow, and Anna Vorwig, was very critical of Trump’s big tax increase on trade. Here are the policy conclusions from the study.
The evidence presented in this brief leads to several unavoidable conclusions. First, tariffs are a tax on Americans. The claim that foreign countries “pay” for US tariffs is empirically false. With approximately 96% pass-through, nearly all the tariff burden falls on American importers and, ultimately, consumers. The $200 billion surge in customs revenue represents $200 billion extracted from American businesses and households. Second, tariffs do not transfer wealth from foreigners to Americans. They transfer wealth from American consumers to the US Treasury. This is economically equivalent to a consumption tax—but one that applies selectively to imported goods, creating additional distortions and inefficiencies. Third, trade volumes adjust, not prices. The primary effect of tariffs is to reduce imports, not to force foreign producers to accept lower prices. This means fewer goods, less variety, and disrupted supply chains for American firms. The costs are real and immediate; the purported benefits are illusory. Fourth, supply chains bear significant costs. American manufacturers that rely on imported inputs face higher costs. They must either absorb these costs (reducing profits and investment), pass them to customers (raising prices for downstream buyers), or scramble to find alternative sources (incurring adjustment costs and delays). None of these options is costless. Fifth, the 2025 tariffs repeat the mistakes of 2018–19. Prior research documented near-complete pass-through during the first trade war. The 2025 tariffs, despite being larger in scope and magnitude, produce the same result. There is no evidence that the dynamics of tariff incidence have changed.
There’s also specific analysis of the trade taxes Trump imposed on imports from Brazil and India.
The net result: Foreign producers did not lower their prices. As a result, Americans bore the burden of those higher taxes.
We focus on two countries that experienced sharp, sudden tariff increases in August 2025: Brazil and India. These cases offer clean natural experiments because the tariff increases were large, discrete, and applied to nearly all products from these countries simultaneously. This allows us to use other countries as a control group and examine the dynamic evolution of prices before and after the tariff shock. …Following the imposition of a 50% tariff, Brazilian exporters did not substantially reduce their dollar prices. …This finding confirms our baseline results in a cleaner setting: Brazilian exporters did not “eat” the tariff. The burden of the 50% tariff was passed through nearly in full to US importers. …We compare Indian exports to the US against Indian exports to the EU, Canada, and Australia—destinations that did not impose new tariffs on Indian goods during this period. The pattern is striking: export unit values to the US remained unchanged relative to other destinations. The volume effects, however, were substantial. Export values to the US fell by approximately 18–24% relative to other destinations, and quantities fell by similar magnitudes. Indian exporters responded to US tariffs by shipping less, not by cutting prices.
For very wonky readers, here’s the visual showing the Brazilian and Indian data.
I’ll close with a bit of repetition.
As explained above, I don’t fixate on who pays trade taxes. That’s not how you measure economic damage.
I don’t like Americans having to pay more taxes to a wasteful government, of course, but my greater concern is politicians adding more barriers to prosperity.
