 Who Really Pays for U.S. Tariffs on Foreign Imports?BY: Shelbyville NOW - July 9, 2025 The Basics: Importers Pay, but There’s a CatchWhen goods like clothing from China or auto parts from Mexico arrive at a U.S. port, the importer—usually a U.S. company—pays the tariff to U.S. Customs and Border Protection (CBP). The CBP uses the Harmonized Tariff Schedule to determine the rate, based on the product’s value and origin. In 2022, these tariffs generated about $80 billion for the U.S. Treasury, a tidy sum for the government. But here’s where it gets interesting: just because importers pay the tariff doesn’t mean they bear the full cost. Like any business expense, they try to pass it on. How much they can shift depends on market forces like competition and consumer demand. Consumers Feel the PinchMore often than not, you, the consumer, end up paying. A 2019 study by the National Bureau of Economic Research found that U.S. consumers shouldered about 90% of the cost of tariffs on Chinese goods during the 2018–2019 trade war. Why? If demand for a product—like smartphones or sneakers—is strong and there aren’t many alternatives, importers can raise prices without losing customers. Suddenly, your new phone costs $50 more, and you’re indirectly paying the tariff. Foreign Exporters Share the BurdenIt’s not always a one-way street. Foreign exporters, like Chinese manufacturers, sometimes lower their prices to stay competitive in the U.S. market. This happened during the U.S.-China trade war, where some Chinese firms cut prices to offset tariffs. But their ability to do this depends on how flexible their costs are and how much competition they face. If they can’t afford to cut prices, they risk losing market share. Businesses Get Squeezed TooAmerican companies that rely on imported goods—like manufacturers using foreign steel—also take a hit. Higher costs for raw materials can mean slimmer profits or pricier products. Some businesses, like Walmart or Apple, have responded by shifting suppliers to countries like Vietnam to dodge tariffs, but that’s not cheap or easy. A 2020 Peterson Institute for International Economics study highlighted how these supply chain shifts added costs and complexity for U.S. firms. What Decides Who Pays?The split of tariff costs hinges on a few key factors:
A Real-World Example: The China TariffsTake the Section 301 tariffs on Chinese goods starting in 2018. U.S. importers paid the tariffs upfront, but studies showed consumers bore the brunt through higher prices on electronics, clothing, and more. Some Chinese exporters cut prices to stay competitive, and companies like Apple rerouted supply chains to countries not hit by tariffs. The result? Higher costs for everyone and a reshuffling of global trade. Why It MattersTariffs aren’t just a government policy wonk’s problem—they affect your wallet, the economy, and global trade. They can protect American jobs by making foreign goods pricier, but they also raise costs for consumers and complicate business operations. Policymakers need to weigh these trade-offs carefully. What’s Next?To soften the blow, the government could monitor how tariffs hike consumer prices and offer support to businesses caught in the crossfire. Clear communication about tariff impacts would also help consumers and companies plan better. For now, the next time you hear about a new tariff, know that it’s not just importers writing the check—it’s likely you, too, at the cash register. Sources:
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