Another Tax Hike: As Always, Americans Pay for American Tariffs

In case you haven’t figured out that tariffs are really bad economic policy, the Federal Reserve Bank of New York substantiates what we’ve known since the 1890s about tariffs—the vast bulk of tariff revenue is coming out of Americans’ pockets:

We highlight two main results. First, 94 percent of the tariff incidence was borne by the U.S. in the first eight months of 2025. This result means that a 10 percent tariff caused only a 0.6 percentage point decline in foreign export prices. Second, the tariff pass-through into import prices has declined in the latter part of the year. That is, a larger share of the tariff incidence was borne by foreign exporters by the end of the year. In November, a 10 percent tariff was associated with a 1.4 percent decline in foreign export prices, suggesting an 86 percent pass-through to U.S. import prices.

…In sum, U.S. firms and consumers continue to bear the bulk of the economic burden of the high tariffs imposed in 2025 [Mary Amiti, Chris Flanagan, Sebastian Heise, and David E. Weinstein, “Who Is Paying for the 2025 U.S. Tariffs?” Federal Reserve Bank of New York: Liberty Street Economics, 2026.02.12].

The New York Fed experts cite a Kiel Institute paper from last month that says the same thing happened the first time Trump levied tariffs on China:

The question of tariff incidence is not new. During the 2018–19 US-China trade war, a substantial body of research emerged documenting who bore the cost of those tariffs. The consensus was striking: US import prices rose nearly one-for-one with the tariffs, while Chinese export prices remained largely unchanged. Studies using detailed product-level data found pass-through rates close to 100%—meaning American buyers paid essentially the full amount of the tariff [Julian Hinz, Aaron Lohmann, Hendrik Mahlkow, and Anna Vorwig, “America’s Own Goal: Who Pays the Tariffs?” Kiel Institute for the World Economy: Policy Brief, January 2026].

The Kiel Institute researchers find the broader wave of tariffs in 2025 replicated those grim results:

The 2025 tariffs provide an opportunity to test whether these patterns hold at a much larger scale. The Liberation Day tariffs were broader in scope, higher in magnitude, and applied to a wider range of trading partners. Our findings confirm that the same dynamics apply: near-complete pass-through to US buyers.

…foreign exporters absorb less than 4% of the tariff burden; the remaining 96% passes through to US importers [emphasis original; Hinz et al., Jan 2026].

The Tax Foundation notes that, as a share of GDP, Trump’s tariffs hike taxes on Americans 50% more than did the Affordable Care Act in 2010… and whereas we actually got some good from the ACA—more people insured—the tariffs aren’t boosting manufacturing jobs, reducing the trade deficit, or covering the costs of Trump’s various promises.

The White House claims that last summer’s tax cuts will increase the average tax refund this year by $750, but the Tax Foundation says tariffs “amount to an average tax increase per US household of $1,000 in 2025 and $1,300 in 2026.” So the tariff tax you’ve paid on groceries and clothes and fridges and more has already wiped out that bigger refund and then some.

Tariffs tax Americans. We pay that tax and get less economic prosperity in return.