Are the American people paying for tariffs
Executive summary
Yes — Americans are paying for tariffs: economists and policy shops find that U.S. businesses and households bear most of the economic burden through higher prices, lower real incomes and slower growth, even if the initial incidence sometimes falls on importers or foreign exporters in accounting terms [1] [2] [3].
1. How the bill is actually split: consumers, firms, and foreign exporters
Academic and market estimates converge that the cost of recent U.S. tariffs is not paid exclusively by foreign countries but is largely borne at home — studies and reporting indicate a mix of incidence with substantial shares falling on U.S. businesses and consumers, and a smaller share on foreign exporters [1] [4]; Goldman Sachs’s rough split (40% consumers, 40% firms, 20% foreign exporters) is cited in public summaries [1], while JPMorgan and other forecasters found that businesses shouldered roughly 80% of the tariff bill in the first year but have begun passing costs on to customers, a dynamic that could shift the burden toward households in 2026 [5].
2. Measurable pocketbook effects on American households
Multiple analyses translate tariff policy into dollar losses per household: the Tax Foundation puts the average cost of the 2025 tariffs at roughly $1,100–$1,400 per household depending on legal outcomes [2], while Yale’s Budget Lab forecasts a roughly $1,300 loss per household after substitution effects and models a 0.9% post‑substitution price increase [3] [6]; these are not theoretical alone — company reports show real price increases, such as Wolverine Worldwide raising retail prices after absorbing millions in tariff costs [7].
3. Why the pain was muted in 2025 — and why that matters for 2026
The immediate inflationary shock was softened by exemptions, phased or lowered rates for goods already in transit, and large inventory stockpiles that firms built to avoid earlier announced levies, which economists and New York Times reporting say delayed the full pass‑through to consumers [8] [5]; this postponement means that cumulative effects — more price increases and downward pressure on real incomes — are expected to reassert themselves in 2026 if tariffs remain in place [9] [5].
4. Macro costs: growth, jobs, and government receipts
Macro estimates show tariffs shrink output and employment while raising government revenue in nominal terms: IMF and major financial research find that broad tariff rises can cut GDP growth materially (IMF estimate cited by JP Morgan: a 10% universal rise could reduce U.S. GDP by ~1%) and Yale’s Budget Lab models show tariffs trimming growth and lowering long‑run output by fractions of a percent while raising trillions in conventional tariff receipts over the next decade [10] [3] [6]; those revenue gains, however, are partly offset over time by slower growth and potential legal invalidation of some IEEPA tariffs [3] [11].
5. Politics, messaging and the competing narratives
The White House frames tariffs as fees paid by foreigners and a new revenue source for domestic dividends, but reporting and empirical work show a more complex reality: some tariffs raised large sums this year, yet the administration’s own exemptions, legal challenges (IEEPA cases), and the fact that firms initially absorbed costs rather than passing them through complicate claims that foreigners have paid the tab [12] [8] [13]; independent trackers and think tanks broadly conclude that most of the economic burden falls on U.S. households and businesses even if short‑term incidence is sometimes obscured by timing and administrative choices [4] [11].