Study: American consumers bear most Trump tariff costs

American consumers and businesses bore nearly the entire cost of 2025 US import tariffs, with foreign exporters absorbing only 4 percent of the burden, according to research published by Germany’s Kiel Institute for the World Economy.

The study analyzed over 25 million individual shipments valued at approximately $4 trillion between January 2024 and November 2025, finding that foreign exporters maintained their prices while US import volumes collapsed.

“The 2025 US tariffs are an own goal: American importers and consumers bear nearly the entire cost,” the researchers concluded in their policy brief released this month.

How tariff incidence was measured

The research team examined shipment-level data to track how prices responded when tariffs were imposed. Economic theory suggests tariff costs can be split between exporters (who might lower prices to stay competitive) and importers (who pay higher prices).

The Kiel Institute found a pass-through rate of 96 percent, meaning US import prices rose nearly one-for-one with tariff increases. Foreign export prices remained largely unchanged.

“A coefficient of −0.039 implies that a 10 percentage point increase in tariffs leads to only a 0.39 percent reduction in export prices,” the study states. For a 25 percent tariff, exporters reduced their pre-tariff price by less than 1 percent.

US customs revenue surged by approximately $200 billion (€190 billion) in 2025 compared to the previous year, representing what researchers characterised as “a tax paid almost entirely by Americans.”

Brazil and India case studies confirm findings

Detailed analysis of two specific tariff shocks revealed consistent patterns: Brazil faced a 50 percent tariff imposed August 6, 2025, whilst India saw rates increase from 25 percent to 50 percent between August 7 and August 27, 2025.

In both cases, export prices to the US remained stable whilst trade volumes declined sharply. For India, the study cross-checked findings using Indian export customs data showing exporters maintained prices across all destinations.

“Indian export prices—measured directly from customs records at the port of departure—remained unchanged relative to exports to non-tariffed destinations,” according to the brief. “In both cases, exporters adjusted by shipping less, not by cutting prices.”

Export values from India to the US fell 18 to 24 percent relative to other destinations following the tariff increases.

Why exporters didn’t absorb tariffs

The Kiel Institute’s research identified several factors explaining why foreign exporters maintained prices rather than cutting them to preserve US market access.

Alternative markets provided exporters with options to redirect sales to Europe, Asia and other destinations not imposing new tariffs. The magnitude of tariffs—often 50 per cent or higher—made price concessions economically unviable, as exporters would need to cut prices by one-third just to offset a 50 per cent tariff.

Established supply chain relationships also gave exporters pricing power, since many US importers could not easily switch to alternative suppliers in the short term.

Implications for the sporting goods industry

Companies face a choice: absorb higher costs through reduced margins or pass increases to customers.

“Manufacturers and retailers who purchase imported inputs or finished goods face the next stage of the burden,” the study notes. “Evidence from the 2018–19 tariffs suggests that most firms pass cost increases through to customers.”

The economic cost extends beyond collected tariff revenue. It includes disrupted supply chains, reduced product variety and distorted consumption patterns—what the researchers characterise as “deadweight losses.”

Historical parallel with 2018–19 trade war

The 2025 results mirror findings from research on the 2018–19 US–China trade war, which also documented near-complete pass-through to American buyers. Chinese exporters facing significant new trade barriers did not cut dollar prices to maintain market share.

“The 2025 tariffs, despite being larger in scope and magnitude, produce the same result,” the Kiel Institute researchers concluded. “There is no evidence that the dynamics of tariff incidence have changed.”

The April 2, 2025 “Liberation Day” tariffs included a baseline 10 percent duty on nearly all imports, with higher country-specific rates for many trading partners and additional sector-specific tariffs on automobiles, steel and aluminium. Rates on Chinese goods exceeded 100 percent at some points during the year.

Industry leaders acknowledge price pressure

The tariff impact on consumer prices received public acknowledgment from major retail executives this week. Amazon Chief Executive Andy Jassy told CNBC at the World Economic Forum in Davos that tariffs are “starting to bump up product prices,” confirming the pass-through dynamic documented in the Kiel Institute research.

Jassy’s comments, reported by Reuters, provide real-world validation of the academic findings. Amazon operates one of the world’s largest retail platforms, with visibility across millions of products and pricing decisions from thousands of sellers and manufacturers.