Tariffs and Their Economic Burden: Who Pays the Price?

Economists have traditionally agreed that tariffs, or taxes on imported goods, are primarily passed on to consumers as higher prices. This consensus generally applies to the tariffs implemented by the Trump administration.

The Politicization of Tariff Costs

The economic impact of tariffs became a highly politicized topic after they became a central part of Trump's economic strategy. This led some to assert that foreign entities, rather than U.S. consumers, bore the cost.

During a House Financial Services Committee hearing, Scott Bessent initially denied having previously stated that "tariffs are inflationary" in a letter to investors. He later affirmed this statement after being presented with evidence.

Key Findings: The Burden on U.S. Consumers

Recent analyses from authoritative bodies provide clear conclusions on who bears the cost. The Congressional Budget Office (CBO) and the Federal Reserve Bank of New York have both concluded that U.S. households and firms predominantly bear the cost of the Trump-era tariffs.

Evidence indicates that foreign entities are not paying these tariffs, meaning the burden falls on Americans.

While consumer price reports showed relatively low overall inflation, economic analysis suggests that these tariffs contributed to approximately a 1 percent increase in consumer prices compared to what they would have been otherwise.