Despite President Trump's claims that foreign countries would foot the bill for his sweeping tariff regime, a growing body of research shows that the vast majority of these costs are being passed on to American consumers and businesses. What this really means is that Trump's aggressive trade policies are effectively a tax on the American people, undermining the very economic prosperity he promised to deliver.
The Numbers Don't Lie
A recent study by the Federal Reserve Bank of New York found that a staggering 90% of the costs from Trump's tariffs were paid by U.S. firms and consumers. Similarly, researchers at the Kiel Institute in Germany concluded that foreign exporters absorbed only about 4% of the tariff burden, with the remaining 96% falling on American buyers.
The basic economics of tariffs explain this dynamic - importers are the ones who pay the levies upfront to the U.S. government, and they then have to decide whether to pass those costs on to consumers or cut into their own profit margins. Overwhelmingly, they've chosen the former, leaving American households to foot the bill.
A Losing Proposition
The bigger picture here is that Trump's trade wars are not achieving their intended goals. Rather than compelling manufacturers to relocate production to the U.S., the tariffs are simply driving up costs for American businesses and consumers. As recent analysis has shown, this is causing alarm on Wall Street and creating headwinds for the broader economy.
In the end, Trump's tariffs amount to a regressive tax that disproportionately harms lower- and middle-income Americans, all while failing to deliver the promised benefits. As the economy booms but jobs lag, it's clear that the president's trade policies are not the panacea he claimed they would be.