The True Cost of Tariffs: How US Businesses and Consumers Felt the Impact in 2025
A recent study by the New York Federal Reserve revealed that US businesses and consumers bore the brunt of the costs of Donald Trump's tariffs in 2025. Despite the administration's claims that foreign companies would absorb the tariffs, the study found that the majority of the tariff costs were passed on to Americans. The study indicated that US firms and consumers continued to shoulder the economic burden of the high tariffs imposed during the year.
The Trump administration had asserted that the tariffs imposed on trading partners would be paid by companies exporting goods to the US. However, the study contradicted this claim, showing that the tariff costs were primarily borne by US entities and consumers. The study also highlighted that the tariff pass-through into import prices decreased towards the end of the year, with a larger share of the burden falling on foreign exporters.
Other studies have corroborated the findings of the New York Fed study, indicating a high tariff pass-through rate to Americans. The impact of tariffs on US households was estimated to result in an average tax increase of $1,000 in 2025 and $1,300 in 2026. Despite concerns about inflation, the consumer price index saw a modest decrease from 3 percent in January 2025 to 2.7 percent in December.
Throughout 2025, the average tariff rate on US imports surged from 2.6 percent to 13 percent, as per the New York Fed study. These findings underscore the significant impact of tariffs on US businesses and consumers, challenging the notion that foreign companies would bear the burden of the tariffs.