If it gives you any comfort, the bev/al industry isn’t the only one paying for Donald Trump’s tariffs. American business and consumers in general are paying for Donald Trump’s tariffs.

That’s the conclusion of a new study which analyzed more than 25 million shipment records covering a total value of almost four trillion US dollars in US imports. The findings are clear:

• US customs revenue increased by about $200 billion in 2025.
• Foreign exporters absorbed only about 4%of the tariff burden, 96% passed through to US buyers.
• Trade volumes collapsed, but export prices did not fall.

"The tariffs are an own goal," says Julian Hinz, research director at the Kiel Institute for the World Economy and one of the authors of the study. "The claim that foreign countries pay these tariffs is a myth. The data show the opposite: Americans are footing the bill." The tariffs act like a consumption tax on imported goods. At the same time, both the variety and volume of available products decrease.

Policy Implications

We’ll go through the study’s detailed findings in a minute.  But first, the study reaches several unavoidable policy conclusions:

“First, tariffs are a tax on Americans. The claim that foreign countries “pay” for US tariffs is empirically false. With approximately 96% pass-through, nearly all the tariff burden falls on American importers and, ultimately, consumers. The $200 billion surge in customs revenue represents $200 billion extracted from American businesses and households.

“Second, tariffs do not transfer wealth from foreigners to Americans. They transfer wealth from American consumers to the US Treasury.” This is economically equivalent to a consumption tax—but one that applies selectively to imported goods, creating additional distortions and inefficiencies.

“Third, trade volumes adjust, not prices. The primary effect of tariffs is to reduce imports, not to force foreign producers to accept lower prices. This means fewer goods, less variety,and disrupted supply chains for American firms. The costs are real and immediate; the purported benefits are illusory

Fourth, supply chains bear significant costs. American manufacturers that rely on imported inputs face higher costs. They must either absorb these costs (reducing profits and investment), pass them to customers (raising prices for downstream buyers), or scramble to find alternative sources (incurring adjustment costs and delays). None of these options is costless.”

That last point – that higher tariffs may force manufacturers to return manufacturing to the U.S. – is a worthwhile goal.  The question is: Can Trump and the Republicans stand the political cost – especially if Democrats figure out how to convert this an similar studies into political talking points?

The Details Behind the Conclusions

The study also examines the unexpected tariff hikes imposed on Brazil and India in August 2025: tariffs on Brazilian imports were suddenly raised to 50%, and for India, to 50% from 25%. Again, the data show that foreign exporters did not lower their prices to offset the additional tariffs. Had exporters absorbed the tariffs, their U.S. prices would have fallen relative to other markets—but this was not the case.  

"We compared Indian exports to the U.S. with shipments to Europe and Canada and identified a clear pattern," Hinz explains. "Both export value and volume to the US dropped sharply, by up to 24 percent. But unit prices—the prices Indian exporters charged—remained unchanged. They shipped less, not cheaper."

This isn’t some shocking new finding.  What’s shocking is that Trump’s economic advisor wither failed to warn him of the consequences or he ignored them. It’s a repeat of Donald Trump’s last trade war – the one with China in 2018-2019.  

Studies then “using detailed product-level data found pass-through rates close to 100%—meaning American buyers paid essentially the full amount of the tariff. Chinese exporters, despite facing significant new trade barriers, did not cut their dollar prices to maintain market share. Instead, the primary adjustment occurred through reduced trade volumes:fewer Chinese goods entered the United States, but those that did were not discounted.,” the study says.

The latest study finds that “ if the US imposes a 25% tariff on a product, exporters reduce their pre-tariff price by less than 1%. The tariff-inclusive price paid by US importers rises by approximately 24%—nearly the full amount of the tariff.

This finding has direct implications for the distribution of the tariff burden. If approximately 96% of the tariff is passed through to US buyers, then for every $100 in tariff revenue collected, roughly $96 comes out of American pockets and only $4 represents a reduction in foreign exporter profits. The claim that foreign countries “pay” the tariffs is, at best, 4% true.

Why don’t exporters adbsorb tariffs?  The study offers several possible explanations:

• “The United States is a large market, but it is not the only market. Exporters facing US tariffs can redirect their sales to Europe, Asia, or other destinations. If redirecting sales is feasible, exporters have less incentive to cut prices specifically for US buyers.”
• Even if an exporter cuts prices, a 50% tariff is extremely difficult to overcome through price concessions. An exporter would need to cut their price by one-third just to offset a 50% tariff—a margin cut that would likely be unprofitable for most firms.
• If exporters believe tariffs may be temporary or subject to negotiation, they have less incentive to make costly price adjustments
• Many US importers have long-standing relationships with foreign suppliers and cannot easily switch to alternative sources. This gives existing suppliers pricing power: they know that their US customers cannot immediately replace them, so they face less competitive pressure to cut prices.”

The study notes that importers, wholesalers, manufacturers and retailers who purchase imported or finished good bear the burden of the tariff. But ultimately, “consumers are the ultimate bearers of the burden. Whether through higher prices on imported goods, higher prices on domestically produced goods that use imported inputs, or reduced availability and variety of products, American households pay for the tariffs,” the study says.

Trump Threatens Higher Tariffs on Seven European Countries’s Goods

In his attempt to take of Greenland, President Trump is threatening an additional 10% tariff on goods from Germany, France, the UK, Netherlands, Sweden, Denmark and Finland.  Obviously, beer, wines and spirits imported from those countries would appear to be affected as would a variety of other luxury goods.  The Wall Street Journal has a partial list, here.