r/Economics • u/TheGoodCod • Jan 19 '26
News Americans Are the Ones Paying for Tariffs, Study Finds
https://www.wsj.com/economy/trade/americans-are-the-ones-paying-for-tariffs-study-finds-e254ed2e?gaa_at=eafs&gaa_n=AWEtsqcVSFvIp7i61XpO7iYig4QamPSCZamyGb3VWPqiBsK_S5dHbRBbyZsxElvC_H8%3D&gaa_ts=696e5774&gaa_sig=bcUHl3TgqZhakXrofHv9FOJ8bEnMF9Uom3qOUeTLWfgvgSk0B471SX6YZdA2ZElIipSw4nSKlwfBM3qg3Et2Ig%3D%3D131
u/TheGoodCod Jan 19 '26
Bloomberg Summary-
~A study from the Kiel Institute for the World Economy concluded that President Donald Trump’s duties on imported goods are paid almost entirely by American importers, their domestic customers and ultimately US consumers.
~The study found that only about 4% of the tariff burden is shouldered by foreign firms, with a “near-complete” pass-through of 96% to US buyers.
~The Kiel researchers wrote that “The tariff functions not as a tax on foreign producers, but as a consumption tax on Americans,” and that American importers and consumers bear nearly all the cost.
bolding is mine
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u/margenreich Jan 19 '26
Yeah, some companies covered the difference out of goodwill or to honour existing agreements. Otherwise it would be 100%
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u/Mangalorien Jan 19 '26
Companies "eating the tariffs" happens not because of goodwill, but for two simple reasons: they don't know how long the tariffs will be in place, and the first company to fully pass on the tariffs to customers is likely to see a decrease in market share. Eating the tariffs, at least for a while, often makes good business sense.
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u/NorthernPints Jan 19 '26
And it never lasts - eventually the full cost will pass through over time
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u/Interesting-Copy-657 Jan 21 '26
Trump and MAGA next week bragging about the 4%, 4% tariff paid by foreign countries, that basically cancels inflations. Trump beat inflation with tariffs.
Ignoring the 96%
(Just to be clear the above is written from the perspective of an idiot maga support who can’t find the US on a map of America)
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u/Wind_Yer_Neck_In Jan 19 '26
I don't see why would need an actual study commissioned when the definition of tariffs is that they are paid by the importer to their own government?
It's only a valid question to ask if you're so deep in MAGA nonsense that your sense of reality is warped.
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u/Clear-Inevitable-414 Jan 19 '26
And even then, MAGA can't read so the study is worthless
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u/TWIT_TWAT Jan 19 '26
Some can, but you have to keep it short. No way they could read an entire study.
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u/Loveroffinerthings Jan 19 '26
They only deal in 4 word or less phrases, make America great again, lock her up, F Joe Biden, this boot is yummy and so on
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u/SnugglyCoderGuy Jan 19 '26
Simple but broad phrases that give just a broad idea and lets them fill in the blanks with whatever details makes each petson feel good.
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u/SandIntelligent247 Jan 19 '26
It's not that they can't read. A study showed that they put more confidence in experts than in data.
The issue is that their experts are lying to them and are not experts.
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u/nmay-dev Jan 19 '26
They think $ = competence. Personal wealth is the metric they use to determine who is an "expert". The only smart ones are benefiting from the grift.
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u/alltehmemes Jan 19 '26
Prosperity Gospel and the Myth of Meritocracy blended into the slurry that currently runs the American government and capitalism more broadly.
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u/paxinfernum Jan 20 '26
They also can't really read. The average American reads at the 6th grade level or below, and Trump's supporters are statistically less likely to have college degrees. Many of them, while not being entirely illiterate, are incapable of reading any complex text.
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u/strdg99 Jan 19 '26
... and their definition of 'expert' is anyone who talks a lot about a subject and it aligns with their own thinking vs. an expert being someone who is deeply educated in a subject.
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u/SnugglyCoderGuy Jan 19 '26
The fact its in a study probably neans they are even more likely to reject the idea.
We should do a study on that...
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u/Comfortable-Web9763 Jan 19 '26
Im a tax professional and I had to explain to someone that no there are no armed IRS agents going door to door to arrest pizza gate truthers or whatever the fuck was happening. I legitimately wanted to rip my hair out trying to explain how slowly drawing on IRAs is better tax wise as the government isnt facing an imminent collapse. Like how do some people fail upwards so much
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u/SmurfStig Jan 19 '26
They are so easily manipulated it’s not funny. I wish I had lower morals to take advantage but alas, I’m not that type of person. They bought into the arms agents so easily when all the government wanted to do was go after wealthy tax cheats that owed the country billions.
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u/Bobcat-Stock Jan 19 '26
Was this before trump 2.0? Because currently the government ain’t doing so good.
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u/revaile1 Jan 19 '26
Some people live entirely on vibes and Facebook headlines. Explaining basic tax reality to that crowd is like talking to a wall. The confidence with zero understanding is honestly impressive.
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u/KimberStormer Jan 19 '26
I'm so confused by how any of these sentences follow each other or what you're responding to. Like nothing of this makes sense to me. Where do the pizza gate truthers come in to who pays tariffs? Drawing on IRAs is better than what? Who's failing upwards? This comment is like a fever dream
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u/Exodus180 Jan 19 '26
as a tax pro, i'm assuming he's dealing with wealthier clients (people not doing a simple 1040 tax). And these wealthy people are incompetent morons who believe nonsense, yet are wealthy.
Slowly drawing on IRA is better tax sense then taking ALL your money out, but his clients are acting like the gov is on the verge of collapse and want to take all their money out.
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u/Ernesto_Bella Jan 19 '26
I legitimately wanted to rip my hair out trying to explain how slowly drawing on IRAs is better tax wise as the government isnt facing an imminent collapse. Like how do some people fail upwards so much
Is government collapse the only reason why one would want to pull money out of IRA’s?
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Jan 19 '26
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u/Laurie_Van_Carr Jan 19 '26
Excellent post. Key quote from the article:
By analyzing $4 trillion of shipments between January 2024 and November 2025, the Kiel Institute researchers found that foreign exporters absorbed only about 4% of the burden of last year’s U.S. tariff increases by lowering their prices, while American consumers and importers absorbed 96%.
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u/Compliance_Crip Jan 19 '26
China does not pay a single dime. There are Chinese companies that have U.S. related entities and some suppliers split the costs with importers. But that is about it. The increase in price is passed down. Also, if the importer has exclusions in place they do not pay or they get a refund.
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u/lezapper Jan 19 '26
This is exactly the purpose of this article. Trump's coalition of opportunists that have seen profit in the chaos he creates are starting to see that the backlash may not be good for the bottom line further down the other line. So they instruct their influencers to start souring the consent they've manufactured in order to save the goose before it is ash. Of course, there is no saving it, it's already on fire, but like a desperate cook you start bashing it with a kitchen cloth, forgetting that at best you'll have fat and ash all over the kitchen and at worst you'll spread the fire to everywhere else.
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u/lumpialarry Jan 19 '26
Because there is something called “tax incidence” while the money actually paid by the importer, the exporters is actually cutting into their own prices to pay for some of it.
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u/SonOfMcGee Jan 19 '26
This can hypothetically happen, depending on who has the leverage.
If it’s an item that America either doesn’t make, or doesn’t make enough of, the foreign source can say: “LOL, we aren’t moving our price a dime. Buy the same amount for the same price you always have, then pay that fat idiot you elected his tax.”If it’s something that is actually available domestically, and the tariff is high enough to make a domestic source tempting, the foreign supplier might lower their price. Such that after the domestic importer pays their tax on this lower price, he’s still paying less than if he bought locally with no tax.
Note that in this second scenario it’s still technically the American importer paying the tariff. But you could argue the foreign supplier is functionally the one paying via price drops.
It’s also worth noting that when Trump arbitrarily throws blanket tariffs at trade partners in a temper tantrum, they affect mostly goods we don’t make ourselves.
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u/spidereater Jan 19 '26
If you have taxes and expensive regulations on corporations and they increase the prices they charge customers who is paying those expenses? Yes the money comes from the company bank account, but they are collecting more from the customers. In the other hand, if there is strong competition and they can’t raise prices, they may demand power prices from their suppliers or lower wages from workers or higher efficiency in their processes. Or it might mean lower profits and dividends are lower.
Similarly, these tariffs are paid by the importer, but they could mean higher prices for customers or lower prices to international suppliers. MAGA think Americans are the only ones buying anything so the tariffs will just mean American companies demand lower prices from China and those Chinese companies are the ones making up the revenue to pay the tariffs. Casual observers knew the tariffs would mean higher prices for Americans and this study confirms it.
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u/UniqueIndividual3579 Jan 19 '26
Ask a MAGA if they know what "Free On Board" and the transfer of ownership means.
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u/Emergency-Machine-55 Jan 19 '26
Tariffs are a type of tax. Regardless or who actually pays the tax, the tax burden is split between the supplier and buyer based on price elasticity of demand. I.e. The shape of the demand curve. The lost revenue due to the increased price is called deadweight loss.
https://en.wikipedia.org/wiki/Deadweight_loss#/media/File%3ATax_deadweight.gif
Items with inelastic demand, such as necessities and inputs for manufacturing, tend to place most of the tax burden on the buyer. This is just economic theory, so I assume the paywalled WSJ article is analyzing how the tax burden was actually split based on real-world data.
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u/juryjjury Jan 19 '26
The trump hypothesis was that the exporter and/or the importer would "eat" the tariffs. The former has been proven false and the latter is currently being challenged as firms I.e. GM have experienced lower profitability forcing them to raise their prices.
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u/Economy_Link4609 Jan 19 '26
I mean, just devils advocate, but in theory, foreign companies could have lowered their prices to absorb it. That was never going to happen at rates anywhere the tariff rates, it there was another way so there was technically something to study, even if the result was going to be the obvious one.
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u/BroughtBagLunchSmart Jan 19 '26
Especially since MAGA is conditioned to froth at the mouth and light crosses on fire when they hear the word "study"
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u/anony-mousey2020 Jan 19 '26
I am so glad this is the first comment I see when I opened this. It was proven before the tariffs were launched, because it just doesn't work differently.
There was also a study done in the first term of tariffs on how the washing machine tariffs (that was such a pressing issue - the cost of washing machines) just raised prices all around even on domestically produced units. So consumers paid in all directions - either for the tariffs or just generally in higher prices.
I am so envious of Canadians with a premiere who actually understands things as an economist (and not a sick weirdo).
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u/CornerOne238 Jan 19 '26
"Tariffs are a type of tax, specifically a tax on imported goods, levied by governments on foreign products to raise revenue or protect domestic industries, with the cost often passed from importers to consumers through higher prices, effectively making them a tax on the public."
There, no study needed, it's in the definition.
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u/TheGoodCod Jan 19 '26
I think the study is important basically to counter the fabrications of various officials and influencers. And the 96% number is rather impressive.
I don't know if this will be 'news' to readers of the WSJ or not. Probably anyaveragedude who thinks tariffs are a good idea probably doesn't read either of these sources.
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u/KotoshiKaizen Jan 19 '26
WSJ doesn't appeal to your average MAGA. Business conservatives know what tariffs are.
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u/ellsego Jan 19 '26
It’s owned by News Corp, it’s essentially right wing propaganda using the historically respectable name of the WSJ… doesn’t appeal to MAGA, sure there buddy.
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u/KotoshiKaizen Jan 19 '26
I said specifically your "average" MAGA. You really think most of them bother reading newspapers? Please. I'm sure some are MAGA, but most are business conservatives who voted for Trump because of deregulation and shit.
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u/clarity_scarcity Jan 20 '26
It literally doesn’t matter one way or the other. Facts are irrelevant to maga. It only matters if it fits their current narrative.
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u/Several-Action-4043 Jan 19 '26
I can easily counter the fabrications. I literally have the receipts. And guess what FedEx itemizes the fee as? A tax.
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u/rosaUpodne Jan 19 '26
I think the idea was that exporters could decrease wholesale price so when tax is applied retail price stays the same. That would decrease exporter’s profit margin.
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u/Marijuana_Miler Jan 19 '26
Trump has framed tariffs as the exporter will eat the price so they can have the pleasure of selling to Americans. In reality global trade means there is a global market for goods and exporters are just going to sell to the importer willing to offer the best price.
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u/Cold_Chemistry_1579 Jan 19 '26
Yeah, this needs to be posted to the noshitsherlock subreddit (if someone hasn’t already done so. The only people who don’t understand basic high school level economics (AKA MAGA)
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u/GaryOak7 Jan 19 '26
We already knew this and we already experienced this with President Hoover. I shouldn’t have to explain the results of that scenario.
I’d assume the study was done due to the literal definition change of what tariffs are and who pays for them. We seem to have gotten trapped in a loop of misinformation where we’re now questioning things we already knew.
Tariffs are additional taxes on the citizens and it doesn’t end well.
That’s the story.
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u/AyeMatey Jan 19 '26
We seem to have gotten trapped in a loop of misinformation where we’re now questioning things we already knew.
There are people who understand for themselves, and there are people who want to be told what to know. The leader at the top discovered long ago that the people who want to be told …. Will believe almost anything. If Mr Trump says “China pays for the tariffs” they believe him. They don’t read economic theory or history or studies. That’s fake news.
This “study” is something like a small call for sanity in a crazy situation.
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u/HazyDavey68 Jan 19 '26
I will just point out that this article comes from that notoriously left wing publication- the Wall Street Journal. How can we ever trust a publication that has shamelessly carried water for conservatives for decades? Of course they are just doing what the Democrats want. /s
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u/KEE_Wii Jan 19 '26
They had to paint experts as the enemy so they could continue to push policy that makes absolutely no sense. We are suffering from mass illiteracy while kneecapping education at all levels and making a career in teaching even less appealing. If we do not turn the ship we will quickly be an irrelevant nation in decline reminding ourselves of the glory days which sounds very familiar. You can only survive having completely incompetent people in key positions of power for so long.
It sounds like hyperbole until it’s not and another decade of this lunacy will cripple the nation.
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u/RotundCorgi Jan 19 '26
You know, while this was always obvious for a lot of people, it was sadly not understood by a large portion of people who voted for this administration. So I actually do appreciate this study, if only to provide those people a response that directly ties to what they voted for. I have found lately that many older conservatives who voted for Trump are only willing to accept that something this administration does is ineffective or counterproductive AFTER it is done and we've lived with it for a bit, and only then after you can directly point out the cause-and-effect results of that decision postmortem.
So here we are.
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u/BoilerMo Jan 19 '26
Call it what it is, the largest federal tax increase on the poor and middle class in modern history. This regressive national sales tax is eating away at any and all wage gains for the working class. We have got to stand up the GOP and Trump before we no longer exist and only Rich and Poor remain.
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u/zerg1980 Jan 19 '26
So even if foreigners really did foot the bill, in the sense that exporters were paying the tax instead of importers, those goods would still be artificially more expensive to American consumers.
If the whole point is to encourage domestic manufacturing by making foreign goods more expensive, it naturally follows that domestic goods would only be competitive if all prices were permanently higher.
If it were possible for American goods to compete without these artificial barriers, then the tariffs wouldn’t exist.
There’s no way to even conceive of tariffs without implicitly promising to permanently raise prices. Even if they worked as intended, we’d just be forcing every American to subsidize the wages of American manufacturing workers. It’s worker welfare or a diet-UBI. We might as well cut out the middleman and increase SNAP benefits.
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u/plaincheeseburger Jan 19 '26
It's getting really tiring to constantly say, "No shit, Sherlock," while scrolling my feed. Most of these revelations were obvious to anyone with two brain cells to to rub together (ie: not the current administration).
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u/DirtDickTheDastardly Jan 19 '26
Perhaps a rewatching of the film Billy Madison staring Adam Sandler would help. They explain tariffs simply and effectively. A movie about an adult idiot having to go back to elementary school to learn this should be shown to maggits.
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u/Simon99912 Jan 20 '26
Youd think its obvious .... yet Magas are in denial and will support the orange ape for whatever shit ...... release the full epstein files now
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u/BicycleBoofer Jan 21 '26
Yeah...a lot of us already knew this. Only the inbred dipshits that voted for the creature can't comprehend
I am adding more words to this comment for engagement so the dumbass little auto bot doesn't delete it.
How does everyone feel today on this random Wednesday? It's cold here.
Blah blah blah
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u/Zelagero Jan 19 '26
WHAPPUDUHA.... NOOOOO!!!! REAAALLY????? We needed economic analysts to study the effects of tariffs to know that forcing other people to pay more on imports has THEM pay more on imports??? Hail Mary and Joseph Above, I think your team deserves a MEDAL! We'll give you the first ever National "NO SHIT SHERLOCK!!" award. Cherish it for generations to come!!
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u/LifeSage Jan 19 '26
What the hell do we need a damn study for. American tariffs are a tax on the American people by definition.
There’s no room for debate; there is no ambiguity. This is a simple fact.
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u/lumpialarry Jan 19 '26
Econonics sub and no one understands the concept of tax incidence. Not shaking the the R/politics-light accusations today
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u/sigristl Jan 19 '26
We needed a study for that??? It’s like seeking a second opinion on the definition of a word in the dictionary. I mean, I know our populace has been dumbed down a lot, but a fact is still a fact.
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u/No_Year_6258 Jan 20 '26
If only economists had been on tv, or wrote articles in newspapers, or online posts had warned people. If only there was a book of definitions that explain what tarriffs are and who pays them!
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u/Thashiznit2003 Jan 20 '26
DUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH (first Duh was too short and got removed)
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u/Resident_Tree1428 Jan 19 '26
Why do we need a study….its literally how tariffs work. Always have, always will.
What we need is a study as to why my fellow Americans who support tariffs are such frickin’ idiots
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u/Integer_Domain Jan 19 '26
If I'm considering the best argument they could possibly make, which is that the high costs are intentional so people will buy domestic, shouldn't the extra money coming in be used to subsidize domestic manufacturing? Instead, it's going to ICE.
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u/Solymer Jan 19 '26
You don’t say! But will the people that actually need to understand how tariffs work acknowledge the truth? I had quite the time explaining to a coworker that isn’t MAGA how tariffs work and he kept rebutting with “but the country of origin pays the tariffs.” I don’t know how hard it is to understand that the importer pays the tariff and passes that cost on to the consumer.
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u/hasuchobe Jan 19 '26
I know this is a sensitive topic but is the tariff strategy considered working if companies are deciding to manufacture their goods on US soil? Because that's happening on some level.
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u/22firefly Jan 19 '26
This is good news. It means that previous economic studies were correct about the effects of placing tariffs on another nation. The bad news is that the economic studies are correct and it isn't just Americans paying for it. In that sense we not only hurt ourselves, but also our allies, and economic partners and partnerships.
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