A new study from the Kiel Institute for the World Economy found that Americans bore 96 percent of the costs incurred by President Trump’s tariffs last year.
The study, which analyzed shipment-level data covering over 25 million transactions, found that firms importing goods into the U.S. absorbed only 4 percent of the costs from the levies. The remaining 96 percent was passed on to American buyers, while U.S. customs revenue surged by roughly $200 billion last year.
The Kiel Institute noted that firms passed on tariff costs to buyers due to, among other reasons, the existence of other markets in Europe, Asia or elsewhere and difficulties switching suppliers.
Trump unveiled sweeping tariffs on foreign partners last April, imposing a baseline 10 percent tax on all imports and higher rates for certain countries, such as China, and specific sectors, such as automobile parts, steel and aluminum.
The president has since increased tariffs on imports from Brazil and India to 50 percent. He reversed course on Brazil in November, lifting levies on food imports, including coffee, fruit, cocoa and beef.
On Saturday, he threatened 10 percent tariffs starting Feb. 1 on imports from Denmark, Norway, Sweden, France, Germany, Finland, the U.K. and the Netherlands over their support for Greenland’s sovereignty.
Trump added that the levies will increase to 25 percent on June 1, and will remain in place until Danish and Greenlandic officials agree to grant the U.S. control of the mineral-rich island.
Last month, inflation hit 2.7 percent, down slightly from 3 percent in January. Federal Reserve Chair Jerome Powell said in December that the president’s tariffs are causing “most” of the overshooting of the central bank’s 2 percent inflation target.
“We do think of those as likely to, in the current situation, likely to be a one-time … price increase,” Powell told reporters.
The month prior, the Trump administration defended his widespread tariff authority in front of the Supreme Court. The president has cited the International Emergency Economic Powers Act — which grants him the authority to regulate economic transactions during national emergencies — to justify the import taxes.
The administration’s argument, though, garnered skepticism from conservative and liberal justices alike in November. It is unclear when the high court will rule on the case, which was on an expedited timeline.
