US Firms Bear 90% of 2025 Tariff Costs
A new study by economists found that nearly 90 per cent of the economic burden from tariffs in 2025 was borne by US companies and consumers. The study, utilizing data up to November 2025, reveals that approximately 94 percent of the tariff costs were transferred to US firms and consumers during the initial eight months of the year. By November, foreign exporters were absorbing slightly more — a 10 per cent tariff was associated with a 1.4 per cent decline in export prices — but pass-through still stood at 86 per cent. “This result means that a 10 per cent tariff caused only a 0.6 percentage point decline in foreign export prices,” stated Mary Amiti, Chris Flanagan, Sebastian Heise, and David E. Weinstein in the report.
Following April 2 — President Donald Trump’s “Liberation Day,” when he declared significant new import tariffs — the average US tariff rate experienced a notable increase from 2.6 percent to 13 percent. This surge was particularly pronounced in April and May, attributed to substantial, albeit temporary, hikes on Chinese products, as revealed by the study. Despite exemptions and supply shifts reducing the effective duty, the economic burden predominantly impacted Americans. The study found that these increased tariff costs have also expedited supply chain shifts from China to countries such as Mexico and Vietnam.
The researchers conducted an analysis of monthly trade data up to November 2025, employing a statistical method akin to that used for the tariffs in 2018 and 2019. They specifically compared the 12-month changes in foreign export prices with the 12-month changes in tariff rates, while controlling for broader product-level and global price trends. This approach allowed them to estimate the direct effect of tariffs on prices.
