Who pays Trump’s tariffs?
From one perspective, that is a simple question. Despite the president’s routine claims that foreigners pay them, U.S. Customs and Border Protection bills the U.S. importer directly. So it is the importer which pays the tariffs. The importer, however, can always try to get the foreign exporter to bear part of the cost, implicitly, by lowering its prices. The cost can also be passed on to U.S. consumers, like you and me, in the form of higher prices.
So the more logical question to ask is what portion of the importer’s tariff costs are ultimately borne by it, through lower profit margins; borne by the foreign exporter, through lower prices; and borne by U.S. consumers, through higher prices.
A range of studies have attempted to estimate the proportion of tariff costs borne by each of these three groups. I take estimates from multiple Goldman Sachs reports, corroborated against others produced by Yale Budget Lab’s State of U.S. Tariffs (July 14, 2025) and Allianz Trade’s U.S. Business Barometer (May 2025), and amalgamate them in the graphic above—which shows how these proportions change through time.
Going back to June, three months after Trump’s April 2 “Liberation Day” tariff bombshell, most of the tariff cost, 64%, was being borne by U.S. importers. Only 14% of the cost was being eaten by foreign exporters in the form of lower prices, and 22% was being passed on to U.S. consumers in the form of higher prices.
The logic behind these numbers is clear enough. In the few initial months following “Liberation Day,” U.S. importers were unable to shift to lower-cost suppliers. So they had very little leverage to compel their existing foreign suppliers to lower prices. And following Trump’s April 10 90-day pause on most “reciprocal” tariffs above the 10% baseline level, importers and retailers believed—or hoped—that the tariffs were merely a negotiating tool, and so, having built up inventory prior to “Liberation Day,” they largely forbore from passing the cost on to consumers.
By the time we get to October, though, the picture had changed considerably. Importers now bore only 27%[1] of the tariff cost—less than half the estimate for June. A slightly higher 18% was now borne by exporters, and a much higher 55% was being passed on to consumers. This is consistent with the slowly rising inflation data.
Again, the logic behind these numbers seems clear. By October, importers had had some time to seek out alternative suppliers, giving them a bit more negotiating leverage with existing ones. Also by October, the administration had announced quite a few bilateral trade deals, or “framework” deals, and progress on others, which made clear that substantial tariffs were here to stay—that is, they were not going to be bargained down to zero, or single-digit levels. This gave importers and retailers good reason to pass on more of the tariff costs to consumers.
Projecting forward to the middle of 2026, we can now expect importers to bear only about 8% of the tariff costs. By this time, they will have had far greater opportunity to seek out lower-cost suppliers, giving them more negotiating leverage. We can therefore expect the exporter burden to rise to about 25% and the consumer share to 67%.
In the end, then, U.S. consumers will bear the greatest part—roughly 2/3—of Trump’s tariffs. The inflation contribution of tariffs should therefore continue to rise heading into next year. Provided that inflation expectations do not become unanchored, inflation should then moderate by mid-year, with the price level 1-1.5 percentage points higher than it would have been without Trump’s tariffs.
[1] Goldman Sachs’ number was actually 22%, but they allocated 5% to tariff “evasion.” I am assuming that tariffs “evaded” would, had they not been evaded, not have been covered by supplier price reductions or pass-through to consumers, although the actual allocations could have been slightly different.
