Who Pays the Price for Tariffs? A Closer Look at Economic Impacts

When tariffs are levied on imported goods, someone has to foot the bill. While some claim that foreign companies are absorbing these costs, mounting evidence suggests that American consumers and businesses are, in fact, paying the price for these tariffs.

Economic Data Reveals the Truth

Recent data indicates that import prices, excluding tariffs, insurance, and transportation costs, have remained relatively stable. This suggests that foreign companies are not lowering their pre-tariff export prices to absorb the tariff costs.

The Impact of Tariffs on Consumers

So far, consumers have largely been shielded from sharp price increases, but their share of bearing the tariff costs is expected to increase in the coming months. Estimates suggest that US consumers bore 22% of the tariff costs as of June, but this figure is projected to rise to 67% by October.

Why Does It Take Time?

There are several reasons why the impact of tariffs on prices is slow to materialize: companies have inventories of goods before tariffs are imposed, costs are shared among various entities in the supply chain, and the on-again, off-again implementation of tariffs means that most tariffs don't take effect for months.

The Stealth Inflation

Recent studies indicate that the cost of imported goods is 5% higher than pre-tariff trends predicted, while domestically produced goods are 3% higher. This impact is expected to continue in steady increments but may be limited depending on product category and industry competitiveness.

Companies' Expectations for Price Increases

Recent studies suggest that companies expect to raise prices this year, regardless of whether they are directly affected by tariffs. These expectations raise questions about whether these price increases will lead to the same inflationary pressures we witnessed during the COVID-19 pandemic.

The Impact of Tariffs on Low-Income Households

Slight price increases over time may be easy for some consumers to manage, but for others, especially those with tight budgets, it may be a "slow boil." Low-income Americans often live month-to-month, allocating their money to the most pressing needs. Companies exploit this situation through "sneakflation" to pass on tariffs in small increments, hoping that consumers won't notice.

Risk Warning and Disclaimer: This article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform. Trading Contracts for Difference (CFDs) involves high leverage and significant risks. Before making any trading decisions, we recommend consulting a professional financial advisor to assess your financial situation and risk tolerance. Any trading decisions based on this article are at your own risk.

Tin moi

N/A

Thứ hai, 25 Tháng Tám 2025

Indices

Israel Offers Gradual Withdrawal from South Lebanon Contingent on Hezbollah Disarmament

N/A

Thứ hai, 25 Tháng Tám 2025

Indices

Stablecoins as New Driver for US Treasury Demand Amid Rising Debt

N/A

Thứ hai, 25 Tháng Tám 2025

Indices

SpaceX Starship Launch Scrubbed: A Deep Dive into Technical Hurdles

N/A

Thứ hai, 25 Tháng Tám 2025

Indices

Who Really Pays for Tariffs? US Consumers vs. Companies