Americans are absorbing the overwhelming share of President Donald Trump’s latest surge in import tariffs, according to new research from the Federal Reserve Bank of New York, challenging recent claims that foreign exporters are footing the bill.
In a report released on Thursday, the New York Fed said 90% of the tariffs imposed by the president on imported goods are being borne by American consumers and businesses.
The findings directly counter the Trump administration’s longstanding argument that the levies are largely paid by overseas producers.
The study assessed the economic impact of tariffs last year, when the average rate of import taxes rose sharply from 2.6% to 13%.
The report noted that tariff levels fluctuated throughout the year, peaking in April and May when Trump lifted tariffs on Chinese goods to 125% before reducing them to 113%.
The authors based their analysis on evidence from Trump’s first term in office. When faced with comparable duties, the report stated that “our past work found that foreign exporters did not lower their prices at all, so the full incidence of the tariffs was borne by the U.S. That is, there was 100% pass-through from tariffs into import prices”.
Between January and August of last year, Americans absorbed 94% of the tariff impact, the paper said. That share declined slightly to 92% in September and October before settling at 86% in November, still leaving the vast majority of costs within the domestic economy.
The findings align with a separate report published this week by the Congressional Budget Office (CBO). The CBO concluded that “higher tariffs directly increase the cost of imported goods, raising prices for U.S. consumers and businesses”.
On the question of burden-sharing, the CBO estimated that foreign exporters would absorb about 5% of the additional costs.
In the near term, “U.S. businesses will absorb 30% of the import price increases by reducing their profit margins; the remaining 70% will be passed through to consumers by raising prices.”
The imposition of large import taxes has become a cornerstone of the Trump administration’s economic policy.
The tariffs are intended to generate government revenue, penalise countries the president argues are exploiting the United States, and encourage the reshoring of manufacturing and strategic industries.
However, the rollout of tariff measures has often been volatile. Sharp increases have frequently been followed by delays, exemptions or partial reversals, creating significant swings in financial markets and adding uncertainty to business planning and investment decisions.
Federal Reserve officials have indicated that tariffs have contributed meaningfully to this year’s overshoot of the central bank’s 2% inflation target. That dynamic has complicated policymakers’ ability to lower interest rates further after delivering 75 basis points of easing last year, moves largely aimed at supporting the labour market.
Attention now turns to the government’s latest consumer price index report, due on Friday. Economists expect a modest easing in the year-on-year headline inflation reading for January, though underlying pressures remain closely monitored.
Fed officials have generally suggested that the inflationary impact of tariffs is likely to fade over time and represent a one-off upward shift in the price level rather than a persistent acceleration in inflation.
Such a scenario could allow scope for additional rate cuts later in the year. Nevertheless, even a temporary price shock would imply a structurally higher cost of living for American households.
Not all policymakers share the same assessment. Speaking on Monday, Fed Governor Stephen Miran, formerly a senior economic adviser to the president, said tariff impacts on the broader economy have been “quite muted”.
He argued that available data do not support the view that American businesses are systematically passing higher import costs directly on to domestic consumers.
The administration’s trade agenda is also facing mounting political and legal scrutiny. On Wednesday, the House of Representatives voted to end the president’s emergency tariffs on Canada, potentially curbing part of his authority to impose such measures.
Meanwhile, the Supreme Court is expected to rule in the coming months on the legality of several of Trump’s tariff actions.
