U.S. consumers have bearing a significant part of the economic burden brought on by President Donald Trump’s tariff moves, according to a new report from Kiel Institute for the World Economy, a Germany-based think tank.
It said that foreign exporters absorbed only about 4% of the tariff burden, with the other 96% passed through to U.S. buyers. These findings are the result if Kiel’s analysis of more 25 million shipment records covering a total value of almost $4 trillion in U.S. imports.
While Trump has defended the controversial tariffs and said they have created “great wealth,” experts have noted that tariffs have historically been a tricky way to raise revenue. Polls also show that Americans overall are dissatisfied with the state of the economy.
For example, CBS News reported Sunday on new poll results that found most Americans believe there hasn’t been enough focus on lowering prices. Per that CBS poll, a large majority said their incomes aren’t keeping pace with inflation and that they believe the Trump administration puts too much focus on events overseas.
Associated Press reporting has highlighted that the tariffs have raised tens of billions of dollars for the U.S. Treasury. However, it seems that average Americans might not be feeling the benefit of those billions.
Kiel also said that “contrary to U.S. government rhetoric, the cost of U.S. import tariffs [is] not borne by foreign exporters,” and are instead being paid by American consumers and importers. That has hurt the U.S. economy as the tariffs act like a consumption tax, the think tank said.
“The claim that foreign countries pay these tariffs is a myth. The data show the opposite: Americans are footing the bill,” Research Director Julian Hinz of Kiel said.
An examination of “unexpected” tariff hikes imposed on Brazil and India last August included in the Kiel analysis also indicated that foreign exporters did not lower their prices to offset the additional tariffs. Kiel explained that: “had exporters absorbed the tariffs, their U.S. prices would have fallen relative to other markets – but this was not the case.”
Instead, Kiel found that export value and volume to the U.S. dropped sharply, up to 24%, while unit prices charged by Indian exporters remained unchanged. To sum it up, Hinz said the exporters shipped less, not cheaper.
Going forward, the research indicates that U.S. companies should expect to face shrinking margins and that consumers shouldn’t be surprised to see prices climb even higher. Meanwhile, other countries will be under pressure to find export markets outside of the U.S.
“Tariffs ultimately disadvantage everyone,” Hinz said.
Trump’s tariffs have been a notable part of the president’s economic plan since he took office last January, and they have impacted everything from the automobile industry to toys and kitchen cabinets. He’s also made other proposals for easing pressure on U.S. consumers, including calling for a cap on interest rates that he wanted to begin this week.