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US businesses and consumers paid nearly 90 per cent of the cost of Donald Trump’s tariffs last year, according to new Federal Reserve research that undercuts the president’s claim that foreign companies would bear the burden.
The study by the New York Fed found that the vast majority of tariff costs were passed through to Americans in the first 11 months of 2025, although exporters shouldered an increasing amount as the year progressed.
“Our results show that the bulk of the tariff incidence continues to fall on US firms and consumers,” the study’s authors wrote in a blog post on Thursday.
“[They] continue to bear the bulk of the economic burden of the high tariffs imposed in 2025.”
The report comes as the president’s tariff regime comes under fire from a number of angles. A Supreme Court ruling on a case challenging the president’s ability to impose the levies is expected imminently. On Wednesday several Republican congressmen broke with the party to back legislation that would reverse Trump’s tariffs on Canada, one of the US’s most important trading partners.
The Trump administration has insisted that the tariffs imposed on trading partners during the president’s second term will be paid for by companies looking to export goods into the US.
“BILLIONS OF DOLLARS, LARGELY FROM COUNTRIES THAT HAVE TAKEN ADVANTAGE OF THE UNITED STATES FOR MANY YEARS, LAUGHING ALL THE WAY, WILL START FLOWING INTO THE USA,” Trump posted on Truth Social in August 2025, shortly before his so-called reciprocal tariffs took effect.
However, others in the administration, including US Treasury secretary Scott Bessent, have acknowledged that US retailers, such as Walmart, have been affected by the decision to raise the levies to levels last seen in the opening decades of the 20th century.
The White House did not immediately respond to a request for comment on Thursday.
The New York Fed study suggested that in the first eight months of the year, 94 per cent of the cost had been passed through. This fell slightly to 92 per cent in the September to October period and 86 per cent in November.
“The tariff pass-through into import prices has declined in the latter part of the year. That is, a larger share of the tariff incidence was borne by foreign exporters by the end of the year,” the authors wrote.
The study, which is based on customs data, did not break down how US businesses and consumers were splitting the burden.
Despite the pass through, the impact on consumer inflation has been more muted than many economists had feared. Consumer price growth fell from 3 per cent in January 2025 to 2.7 per cent in December. Economists expect it to drop again on Friday, when official figures for January 2026 are released.
GDP figures for the first quarter of last year also showed a build-up in imports, suggesting US companies were stockpiling goods ahead of the introduction of tariffs.
Some Fed officials believe the impact of Trump’s trade policies on US shoppers will feed through over the course of 2026 as inventories fall and companies raise their prices. But most policymakers are now confident that the impact of tariffs on inflation will prove a one-off shock, with little longer-term impact on price pressures.
Other recent studies have made similar findings about the hit to Americans from tariffs. A report by Germany’s Kiel Institute last month found a tariff pass-through rate of 96 per cent, while a January study by the National Bureau of Economic Research put the figure at 94 per cent.
A paper last week from the non-partisan Tax Foundation think-tank found that the tariffs amounted to an average tax increase on US households of $1,000 in 2025 and $1,300 in 2026.
Over the course of 2025, the average tariff rate on US imports rose from 2.6 per cent to 13 per cent, according to the New York Fed study.
That has helped provide significant revenues for the federal government, bringing in $30bn in January and $124bn in the fiscal year to date — over 300 per cent more than the same period in 2025.