For years, President Donald Trump has insisted that tariffs imposed by his administration punish foreign producers rather than American consumers. A major new economic study released this week directly challenges that claim, concluding that US businesses and households have paid nearly the entire cost of Trump’s trade policy.
The study, released Monday by the Kiel Institute for the World Economy, finds that foreign exporters absorbed only about 4 percent of roughly $200 billion in tariff payments collected by the United States. The remaining 96 percent was passed on to US importers and consumers, according to the research.
The findings are based on a large scale analysis of more than 25 million shipment records covering nearly $4 trillion in US imports between January 2024 and November 2025. Researchers drew on daily shipment level bill of lading data from Panjiva, official US Census Bureau statistics, and Indian customs records to track how tariffs affected prices and trade flows with unusual precision.
“This finding has profound implications,” the study explains. “If foreign exporters do not reduce their prices in response to tariffs, then the entire burden of the tariff falls on US buyers. The tariff functions not as a tax on foreign producers, but as a consumption tax on Americans. Every dollar of tariff revenue represents a dollar extracted from American businesses and households.”
According to the study, while US customs revenue increased sharply, exporters largely did not reduce prices in response to higher tariffs. Instead, trade volumes declined while prices remained steady, meaning Americans paid more while fewer goods entered the country.
The researchers identified several reasons for this pattern. Exporters redirected shipments to other markets where tariffs were lower or absent. Some firms were unable to absorb the steep price reductions needed to offset US tariff rates. Others avoided cutting prices to prevent encouraging additional tariffs.
Julian Hinz, research director at the Kiel Institute and one of the study’s authors, described the tariff policy as self damaging. “The tariffs are an own goal,” Hinz said. “The claim that foreign countries pay these tariffs is a myth. The data show the opposite: Americans are footing the bill.”
The study also examined the effects of sudden tariff hikes imposed by the Trump administration in August 2025. Tariffs on Brazilian imports were raised to 50 percent, while duties on Indian goods increased from 25 percent to 50 percent. In both cases, exporters did not lower prices to offset the higher tariffs. Instead, shipments to the United States dropped sharply.
“They shipped less, not cheaper,” Hinz said.
The consequences of this pattern fall largely on the domestic economy. The study finds that US companies face shrinking profit margins as higher import costs accumulate, while consumers encounter higher prices and reduced product variety. In this way, the tariffs function as a broad based consumption tax rather than a levy on foreign producers.
The study’s release came just two days after Trump vowed to impose additional tariffs on European countries that oppose his efforts to take control of Greenland. The timing has renewed debate over the economic consequences of using tariffs as a central tool of foreign policy.
Independent economists say the findings align with long standing research on tariff pass through. In an analysis published Monday, economist Dean Baker of the Center for Economic and Policy Research argued that Trump’s latest tariff threats against Europe amount to a massive tax increase on Americans.
“Well over 90% of the cost of a Trump tariff is borne by consumers or importers in the United States, not by the exporting countries,” Baker wrote. “When Trump starts yelling ‘tariff, tariff, tariff,’ he is yelling ‘tax, tax, tax,’ and we’re the ones paying it.”
Baker estimated that the proposed European tariffs would represent a “$75 billion tax increase.” “And $75 billion is not trivial,” he added. “It’s 1% of the budget, more than twice the cost of the enhanced premiums for Obamacare policies that Trump says we can’t afford.”
The Kiel Institute study further found that higher tariffs had little effect on exporters’ pricing behavior. For every 10 percentage point increase in tariffs, average import prices declined by just 0.39 percent. Even when tariffs reached 25 percent, foreign suppliers cut prices by less than 1 percent on average, leaving most of the cost on the US side.
Rather than forcing exporters to lower prices, the study concludes that tariffs primarily redirect trade flows. Exporters seek alternative markets, supply chains adjust at significant cost, and compliance burdens increase. Over time, these dynamics weaken industrial competitiveness in sectors dependent on imported components and materials.
“Tariffs ultimately disadvantage everyone,” Hinz said.
The study, titled “America’s Own Goal: Who Pays the Tariffs?”, was authored by Julian Hinz, Aaron Lohmann, Hendrik Mahlkow, and Anna Vorwig and published by the Kiel Institute for the World Economy in January 2026. Its findings add new empirical evidence to a long running debate over who really pays for tariffs.
“The claim that foreign countries pay these tariffs is a myth,” Hinz said. “The data show the opposite: Americans are footing the bill.”
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