Who pays tariffs?
Executive summary
Tariffs are legally charged to importers and collected by customs, but economic incidence—who ultimately bears the cost—can fall on importers, foreign exporters, or domestic consumers and businesses depending on market responses and pass‑through; multiple recent analyses find U.S. importers and U.S. consumers/businesses have borne a large share of the 2025 tariff increases even as tariffs raised substantial federal revenue (examples: customs revenue estimates of $101.2B Jan–Aug 2025 and $174B Jan–Sep 2025) [1] [2]. Surveys and reporters show firms expect to pass much of the cost to consumers when tariffs persist, while government collections and modeling projects show sizable—but not one‑for‑one—revenue gains for the Treasury [3] [4] [5].
1. Who is billed at the border — importers, legally
By statute and practice, customs duties are assessed on imported goods and paid at entry by the U.S. importer (the entity clearing goods through U.S. Customs and Border Protection); those tariff payments are recorded as customs duties and flow to the federal Treasury [6] [5]. Multiple trackers and government data series explicitly treat tariffs as payments by U.S. importers deposited in Treasury accounts [7] [5].
2. Who actually ends up paying — the economic incidence debate
Economic incidence differs from legal billing. Empirical reporting on 2025 tariffs finds U.S. companies and consumers "bearing the brunt" in practice: Reuters reports importers and consumers are absorbing much of the cost as businesses adjust prices and sourcing, not foreign exporters simply swallowing the levy [8]. The Boston Fed SMB survey shows small and medium businesses that expect tariffs to last a year or longer plan to pass through substantially more of the cost to customers—firms expecting long persistence might pass through up to three times more of cost increases into consumer prices [3].
3. How much revenue are tariffs raising for the U.S. government?
Tariff collections have jumped in 2025: Penn Wharton estimates $101.2 billion in customs revenue between January and August 2025, and other tallies put customs duties at roughly $174 billion through mid‑September 2025 [1] [2]. The Congressional Budget Office projects a materially higher effective tariff rate vs. a year earlier and estimates tariff policy changes could reduce primary deficits by trillions over 11 years if maintained, though CBO also notes many exemptions and evolving rates [4].
4. Why tariff revenue is not equal to total economic cost
Observers note a gap between "tariff payments" and the net revenue effect because tariffs change trade volumes, purchasing patterns, and other tax bases. Wharton/Penn and the Tax Foundation emphasize behavioral responses—import acceleration, substitution, and retaliatory measures—that lower the net revenue the government ultimately realizes compared with headline tariff receipts [1] [2]. Nonpartisan trackers also adjust gross receipts to net revenue, noting typical offsets for income and payroll tax effects [7].
5. Distributional and timing factors — who feels it first and most
Who bears tariffs varies by sector, contract structure, and time horizon. Importers face the immediate cash outlay; firms with thin margins or limited pricing power may absorb more of the cost, while firms able to raise prices will shift costs to consumers [3] [8]. Retaliatory tariffs or exemptions change these dynamics over time: CBO and other trackers stress that exemptions to certain agricultural, electronics, and pharmaceutical products mean more than a third of imports were unaffected by some 2025 rate increases, altering who is hit [4].
6. Political and legal context that shapes who pays
Policy decisions, court rulings, and negotiations affect both who is billed and who ultimately pays. The 2025 tariff program has been fluid: courts have questioned presidential authority to impose some tariffs, the administration has negotiated tariff adjustments with trading partners, and exemptions or temporary reductions (for example, U.S.–China adjustments) have modified rates and revenue projections—each change shifts incidence and revenue outcomes [9] [10] [11].
7. Competing views and the evidence gap
Proponents argue tariffs raise federal revenue and protect domestic producers; scoring models show meaningful revenue increases if tariffs persist [4] [1]. Critics and reporters point to domestic price effects and firm surveys indicating substantial pass‑through to U.S. businesses and consumers—contradicting political claims that foreigners will pay [8] [3]. Available sources do not mention precise household‑level pass‑through in 2025 beyond firm expectations and aggregate revenue estimates; micro‑level consumer incidence remains less well documented in these materials [3] [1].
Bottom line
Legally, U.S. importers pay tariffs at the border and the payments flow to the Treasury [6] [5]. Economically, evidence from 2025 shows substantial pass‑through to U.S. firms and consumers and sizable—but behaviorally adjusted—revenue gains for the government; who ultimately "pays" depends on market power, contract terms, policy exemptions, and time horizon [3] [8] [1].