Who paid Trump’s tariffs up to now and what it means for US financial system  – Invezz | USAEMALL.com

Tariffs have become one of the defining economic tools of the Trump administration.

Politically, they are framed as a way to make foreign producers “pay.” Economically, they function as taxes on imports.

The debate has become noisy. Some argue tariffs are inflationary and costly for households.

Others claim foreigners absorb the burden, and domestic inflation remains contained.

The evidence now available allows a much clearer conclusion, and that is the burden falls overwhelmingly on Americans.

As for inflation, the impact is real, though smaller, more mechanical, and more contained than either supporters or critics often suggest.

Who’s really paying for Trump’s tariffs?

In the first four months of fiscal 2026, US customs duties ran roughly $90 billion higher than a year earlier.

At an annual rate, that is about $270 billion flowing into federal coffers.

All of this while inflation has remained contained and import prices have not collapsed.

But what really matters is whether it is the foreign exporter or the American household that absorbs the tariff imposed.

The Federal Reserve Bank of New York examined import prices before tariffs were applied.

They found that for foreigners to bear the burden, export prices would have needed to fall sharply.

A 10% tariff hike would require roughly a 9% drop in pre-tariff prices to neutralize the effect.

That did not happen. Import prices excluding oil have not fallen in response to the tariff increases.

The New York Fed estimates that between 86% and 94% percent of the tariff burden has been passed through to US importers.

The logic behind this result is not complicated.

The United States accounts for about 13% of global imports.

That is large, although not large enough to force exporters to slash prices across the board.

Foreign firms can redirect goods to Europe or Asia rather than cut margins deeply for one market.

The data line up with the theory. Foreigners are not paying the bill in any meaningful way.

Why did inflation not surge

The second question is about inflation and whether it should spike if American households are paying for the tariffs.

Goods imports represent about 11% of US GDP. Even imported goods contain domestic costs such as transport and retail margins.

When the effective average duty rate rose by roughly 8% points, the direct price effect was limited by the small share of imports in total spending.

If 8% is multiplied by 11%, the result is about 0.9%.

That is the expected one-time increase in the price level.

The CBO confirms the same magnitude from a fiscal angle.

An additional $270 billion in tariff revenue relative to a $31 trillion US economy equals about 0.87% of GDP.

That is essentially a 1 percent tax shock.

Yale’s Budget Lab estimates that current tariffs raise consumer prices by around 1-1.2%.

None of these calculations suggests runaway inflation.

The scale was always going to be modest in aggregate terms.

What do the price measures show

Headline CPI does not show a dramatic jump. However, broader and narrower measures offer more clarity.

Core goods inflation, which focuses on physical goods and excludes food and energy, accelerated after the tariff hikes.

That is the category tariffs directly affect.

The HBS Pricing Lab, which scrapes online retail prices and separates imported from domestic goods, estimates tariffs have added about 1% to the CPI.

Before the 2025 tariff increases, economists expected inflation to continue easing.

Current PCE readings are roughly 0.8% points above those forecasts. That gap is close to what the tariff math predicts.

There is no large mystery once the noise is stripped out. The effect exists, and it is near 1%.

Who inside America bears the burden

Foreign exporters are not paying. The remaining question is whether US firms or consumers absorb the cost.

Some firms likely accepted lower margins at first, especially in competitive sectors. However, core goods prices have risen, and pass-through rates at the border are high.

Most of the burden ultimately reaches consumers through higher retail prices or weaker purchasing power.

New shipment level research from the Kiel Institute for the World Economy finds that roughly 96% of the tariff burden is passed through to US buyers, with foreign exporters absorbing only a small fraction.

The Tax Foundation estimates the average household cost at around $1,500 per year under current tariffs.

The burden is regressive because lower income households spend a larger share of their income on goods.

Tariffs therefore, act like a broad consumption tax on traded products.

It is not always visible in a single grocery receipt, although it shows up across categories over time.

What does this mean for growth and margins

The macro impact goes beyond prices.

The CBO projects that tariffs reduce real GDP relative to baseline forecasts.

Higher input costs, supply chain frictions, and retaliation from trading partners all weigh on output.

The effect is incremental rather than recessionary on its own, although it is persistent.

Downstream manufacturers face higher costs for components and materials.

Some protected industries benefit from less foreign competition and may raise their own prices in response.

However, when domestic producers compete directly with imports, they often lift prices alongside them.

Corporate earnings reflect this uneven landscape.

Some sectors see margin pressure while others gain pricing power. The overall economy absorbs a small efficiency loss.

The revenue story is also limited. Customs duties have risen sharply, although they remain small compared with income and payroll taxes.

Tariffs do not transform the fiscal picture. They generate revenue, but they do so by taxing domestic consumption.

Is more tariff inflation coming

There is a common argument that businesses are still absorbing costs and that a second wave of price increases lies ahead.

The evidence suggests most of the pass-through has already occurred, and import prices have not yet fallen, though core goods inflation reflects higher costs.

Additional increases may occur, although likely in tenths of a percent rather than another full percentage point. The bulk of the adjustment appears complete.

The bigger insight is less dramatic but more important.

The tariffs have produced a permanent upward step in the price level of roughly 1%.

For investors, that means the tariff story is neither a collapse narrative nor a free revenue story.

It is a measurable tax embedded inside the system, already absorbed to a large extent, and now part of the cost structure of the US economy.