A recent report from the Kiel Institute for the World Economy reveals that American consumers and importers are bearing the overwhelming majority (96%) of the costs associated with President Donald Trump's tariffs. This finding directly contradicts the Trump administration's assertion that foreign countries are paying these tariffs.
The Kiel Institute's study analyzed over 25 million shipments, representing over $4 trillion in trade value, between January 2024 and November 2025. The research indicated that foreign exporters absorbed only about 4% of the tariff burden, with the remaining 96% being passed on to U.S. buyers. According to Julian Hinz, Research Director at the Kiel Institute, "The claim that foreign countries pay these tariffs is a myth. The data show the opposite: Americans are footing the bill". This echoes the conclusions of similar studies conducted in the U.S. by U.S. banks, economists, and companies.
Trump's "Liberation Day" tariffs, unveiled on April 2, 2025, imposed a baseline 10% tariff on almost all imports, with higher rates for specific countries and sectors like autos, steel, and aluminum. These tariffs led to a $200 billion increase in U.S. customs revenue in 2025. However, the Kiel Institute's study concludes that this revenue represents a "tax paid almost entirely by Americans".
The report highlights that the tariffs function as a consumption tax on Americans, disproportionately affecting imported goods. For every $100 in tariff revenue collected by the U.S. government, $96 comes from American businesses and households, while only $4 comes from lower profits for foreign exporters. This dynamic arises because foreign exporters have largely maintained their prices while reducing shipment volumes to the U.S.. They may believe the tariffs are temporary or subject to negotiation, giving them less incentive to make costly price adjustments.
The impact of these tariffs extends beyond immediate costs. American importers and wholesalers are initially affected, followed by manufacturers and retailers, who must decide whether to absorb the tariff costs or pass them on to consumers. Ultimately, American consumers face increased prices on both imported goods and domestically produced goods that rely on imported inputs. This can lead to reduced demand, altered purchasing behavior, and potentially slower economic growth.
Economists generally agree that tariffs rarely force foreign countries to bear significant costs; instead, American buyers usually pay the bulk of the expense indirectly. Some economists have described the tariffs as an "own goal" for America. While the Trump administration argues that tariffs will promote domestic manufacturing, protect national security, and substitute for federal income taxes, critics contend that they are based on a flawed understanding of trade and harm the domestic economy.
The Peterson Institute for International Economics calculated U.S. tariffs on Chinese imports at 47.5%. While tariff revenue has increased significantly, reaching $300 billion in 2025, it has not been enough to offset the economic drawbacks or justify claims that tariffs could replace federal income taxes.
