NY Federal Reserve Says Americans Are Paying Most of the Cost of Trump’s Tariffs

Americans, for the most part, are bearing the brunt of last year’s tariffs, according to new Federal Reserve research that undermines President Trump’s insistence that most of the burden is falling on foreign companies and governments.A paper released on Thursday by the New York Fed showed American companies and consumers bore more than 90 percent of the cost of tariffs last year.“Our results show that the bulk of the tariff incidence continues to fall on U.S. firms and consumers,” the researchers said. “These findings are consistent with two other studies that report high pass-through of tariffs to U.S. import prices.”There is, however, one sliver of good news in the report. The researchers found that the percentage of the import tax burden faced by Americans dropped slightly by November to under 90 percent.The researchers determined the cost of tariffs by comparing their size to the change in price of the imported goods.“Given that the average tariff in December was 13 percent, our results imply that U.S. import prices for goods subject to the average tariff increased by 11 percent more than those for goods not subject to tariffs,” the researchers said.The research did not break down how much of the added costs American companies were covering and how much was being passed along to consumers.The research found the higher import prices is causing firms to reorganize their supply chains in an attempt to cut tariff costs. The percentage of import value of Chinese goods dropped considerably, while it grew from other countries that previously were not major trading partners.Mr. Trump has repeatedly claimed that foreign countries are paying the costs for his so-called “Liberation Day” reciprocal tariffs but even his own administration officials have admitted that is not accurate.The Treasury Secretary, Scott Bessent, acknowledged last year that American companies are feeling the pain from tariffs. Mr. Bessent said that Walmart, the largest American retailer, may end up passing along some of the tariff costs to its shoppers through higher prices.The fate of Mr. Trump’s tariff policy is now in the hands of the Supreme Court. The administration is seeking to get justices to overturn decisions by two lower courts that Mr. Trump’s use of the International Emergency Economic Powers Act as the basis of his tariffs was an overstep. That decision could come by the end of this month.Congress is also trying to assert some control over the power to levy tariffs. The House voted on Wednesday to kill Mr. Trump’s tariffs on Canada after six Republicans broke with the administration to roll back the import taxes. The measure could be symbolic. Even if the measure passes the Senate, it wouldn’t have enough support to override a veto by the president.

NY Federal Reserve Says Americans Are Paying Most of the Cost of Trump’s Tariffs

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