Federal Reserve Bank of New York: Consumers and Businesses Bore Nearly 90% of 2025 Tariff Costs

Almost all of President Donald Trump’s tariffs in 2025 were ultimately paid by U.S. consumers and businesses rather than foreign exporters, according to a new analysis from the Federal Reserve Bank of New York.

As the average U.S. tariff rate on imports climbed to 13% in 2025 — up from less than 3% previously — nearly 90% of the tariffs’ economic burden fell on U.S. firms and consumers, the researchers wrote.

Who Pays for Tariffs?

The findings challenge the Trump administration’s long-standing argument that foreign producers absorb most of the costs.

In a January 30 op-ed in The Wall Street Journal, Trump wrote that the burden, or “incidence,” of the tariffs had fallen overwhelmingly on foreign producers and middlemen. He argued that export-dependent nations had little choice but to absorb the tariffs to avoid greater losses from excess capacity.

However, the New York Fed’s data tells a different story.

From January through August 2025, U.S. importers bore 94% of tariff costs, according to the analysis. By November, exporters were shouldering slightly more of the burden, but American importers still paid 86% of the tariffs.

“In sum, U.S. firms and consumers continue to bear the bulk of the economic burden of the high tariffs imposed in 2025,” the report concluded.

Economists have generally argued that tariffs function as a tax on imports, with domestic companies often passing higher input costs along to customers through price increases.

White House Defends Policy

The White House pushed back on the findings, pointing to broader economic performance.

“America’s average tariff rate has increased nearly sevenfold in the past year, yet inflation has cooled and corporate profits have increased,” White House spokesperson Kush Desai said in a statement. “President Trump’s economic agenda of tax cuts, deregulation, tariffs and energy abundance is reducing costs and accelerating economic growth.”

Recent economic data show resilience. U.S. gross domestic product grew at a 4.3% annual rate in the third quarter — the strongest expansion in two years.

The labor market has been steady as well. Employers added 130,000 jobs in January, more than expected, while the unemployment rate held near historic lows.

Inflation Remains Moderate

Despite widespread predictions last year that elevated tariffs would fuel inflation, price pressures have remained relatively contained.

The Consumer Price Index increased 2.7% in December from a year ago, unchanged from November. Updated January CPI figures are due for release soon.

Some analysts have suggested that strong productivity gains, corporate margin compression or currency adjustments may have offset part of the tariff impact.

Tariff Revenue Soars

Higher tariff rates significantly boosted federal revenue. The U.S. Treasury collected $287 billion in tariffs in 2025, a 192% increase compared to the prior year, according to the Federal Reserve Bank of Richmond.

However, the future of those levies remains uncertain.

The Supreme Court of the United States is expected to rule soon on whether Trump had the authority to impose certain tariffs under federal emergency powers law.

If the Court strikes down those tariffs, the government could be required to refund businesses as much as $168 billion, according to estimates from the Wharton School of the University of Pennsylvania.

Broader Implications

The New York Fed’s analysis underscores a central economic debate over who ultimately pays for tariffs. While policymakers may frame tariffs as a tool to shift costs abroad or protect domestic industries, the research suggests the financial burden largely remains at home.

Whether the policy continues — or is reshaped by the courts — could have major implications for businesses, consumers and trade partners in the years ahead.