US businesses and consumers bear the brunt of tariff costs, with a New York Fed study revealing that they pay approximately 90% of the levies, contradicting President Trump’s claims that foreign companies will absorb the costs. This finding has significant implications for the ongoing trade tensions between the US and its partners, particularly China.
US businesses and consumers are shouldering nearly 90% of the costs associated with tariffs imposed by the Trump administration, according to a study by the New York Fed. The research directly challenges President Trump’s assertion that foreign companies, particularly those from China, will pay for the levies, which have been a cornerstone of his trade policy.
The New York Fed’s study is based on an analysis of the impact of tariffs on US import prices and domestic inflation. The findings suggest that the costs of tariffs are largely passed on to US consumers through higher prices, with only a small portion of the costs being borne by foreign companies. This has significant implications for the US economy, particularly for industries that rely heavily on imported goods, such as retail and manufacturing.
The study’s results are consistent with the experiences of several major US companies, including $WMT and $TGT, which have reported increased costs and lower profit margins due to the tariffs. The trade tensions between the US and China have also had a significant impact on the stock market, with the $SPY and $DIA experiencing increased volatility in recent months.
The New York Fed’s research is particularly relevant given the ongoing trade negotiations between the US and China. The two countries have been engaged in a protracted trade dispute, with the US imposing tariffs on hundreds of billions of dollars’ worth of Chinese goods. The Chinese government has responded with its own tariffs on US goods, leading to a significant escalation of the trade tensions. The US-China trade war has had far-reaching consequences for the global economy, with many companies, including $AAPL and $GOOGL, reporting increased costs and decreased sales.
| Tariff Costs | US Businesses and Consumers | Foreign Companies |
|---|---|---|
| Total Costs | 90% | 10% |
Looking ahead, the New York Fed’s study suggests that the US economy may continue to bear the brunt of the tariff costs, particularly if the trade tensions with China persist. The Federal Reserve has already taken steps to mitigate the impact of the tariffs, including cutting interest rates to support economic growth. However, the ongoing trade uncertainty is likely to continue to weigh on the US economy, particularly if the tariffs are not lifted or reduced in the near future.
⚡ Why it matters: The New York Fed’s study has significant implications for the US economy and the ongoing trade tensions between the US and China. The findings suggest that the costs of tariffs are largely borne by US businesses and consumers, rather than foreign companies.
📊 By the numbers:
90% of tariff costs are paid by US businesses and consumers
10% of tariff costs are paid by foreign companies
The US has imposed tariffs on hundreds of billions of dollars’ worth of Chinese goods
🔗 Source: Financial Times*
