The assertion that President Donald Trump’s trade policies, specifically the imposition of tariffs on imported goods, are predominantly borne by foreign businesses rather than American consumers and businesses is receiving significant backing from empirical data. A newly released report from the Federal Reserve Bank of New York, utilizing Census Bureau and Foreign Trade Statistics data through November 2025, presents compelling evidence that American households and businesses have, in fact, been shouldering the vast majority of the tariff costs. The report, authored by Mary Amiti, Chris Flanagan, Sebastian Heise, and David E. Weinstein, reveals that nearly 90% of the tariffs levied during this period were funded by U.S. consumers and businesses, with particularly pronounced burdens appearing in the early months of 2025—94% from January to August, 92% from September to October, and 86% in November.
The underlying economic mechanisms driving this outcome are clearly articulated within the report. Over the course of 2025, average tariff rates quintupled from 2.6% to a staggering 13%. This escalation inherently shifted the burden away from foreign exporters, who, according to economic theory, would typically absorb such taxes to maintain competitive pricing in the U.S. market. However, the report’s data demonstrates that this did not occur. Instead, foreign companies exporting to the U.S. only modestly decreased their prices, leaving domestic businesses to absorb the increased costs or pass them on to consumers. This dynamic is consistent with prior observations from economists who have long warned about the potential damaging effects of tariffs on American competitiveness.
The evidence surrounding the impact of these tariffs is not isolated. It mirrors findings from earlier analyses, including a 2019 study published in the Journal of Economic Perspectives, which indicated that Americans were absorbing the full impact of tariffs through 2018. This earlier study estimated a reduction of approximately $1.4 billion per month in aggregate U.S. real income through 2018 as a direct result of the tariffs. Furthermore, the current New York Fed report aligns with data from multiple sources, including the Harvard Business School’s Tariff Tracker and the Kiel Institute. The Tariff Tracker, through October 2025, revealed that the levies added 0.76% to the Consumer Price Index, effectively contributing to U.S. inflation. The Kiel Institute similarly found that foreign exports absorbed only 4% of the tariff burden, while 96% was borne by U.S. buyers.
The implications of these findings are becoming increasingly apparent amongst U.S. business leaders. For months, companies such as Procter & Gamble and General Motors have raised concerns, announcing price increases on their products, and reporting significant profit hits attributable directly to the tariffs. Procter & Gamble increased prices on items like diapers and skincare products, while General Motors reported a $1.1 billion profit reduction. As Bernstein analyst Daniel Roeskatold Fortunein July 2025, “If the policy is to put tariffs on cars, then that will increase the cost of cars, and ultimately, that will likely increase the price of cars.” It’s a scenario driven by a simple economic principle – tariffs disrupt supply chains and increase costs, forcing businesses to make difficult decisions.
Adding to this concern is the broader economic context. The New York Fed’s findings underscore the challenge President Trump has faced in justifying his trade policies, which have been criticized for hindering economic growth. While inflation has cooled and corporate profits have increased, the tariffs have created a significant drag on economic performance. The Tax Foundation, a nonpartisan think tank, earlier this month confirmed that the costs of tariffs for U.S. households exceed the benefit of a tax break. The group previously estimated Trump’s tax cut would increase the average return by $1,000 from last year, but calculated that the tariff burden for Americans would swell to $1,300 in 2026, wiping out any benefit from the cuts. “Tariffs are really holding back the potential of the new tax law, both to deliver relief to taxpayers and to grow the economy,” Erica York, vice president of federal tax policy at the Tax Foundation, told Fortune. This evidence suggests a growing disconnect between the President’s claims and the realities of the U.S. economy.
