New Study Shows U.S. Paid the Price for 2025 Trade War
A new wave of economic research is challenging one of the most repeated claims surrounding the 2025 tariff escalation - that foreign exporters would ultimately shoulder the cost of higher import taxes.
Key Takeaways
- Nearly 90% of the 2025 tariff costs were borne by U.S. companies and consumers.
- Average tariffs surged from 2.6% to 13% in 2025.
- Import prices on affected goods rose roughly 11%.
- Studies estimate the average U.S. household paid about $1,000 extra due to tariffs.
A study released on February 12, 2026, by economists at the Federal Reserve Bank of New York and Columbia University finds that nearly 90% of the financial burden from last year’s tariff hikes was absorbed by U.S. companies and consumers. The findings suggest that the domestic economy, rather than overseas producers, carried the overwhelming share of the impact.
Sharp Rise in Tariff Rates
According to the report, the average U.S. tariff rate surged from 2.6% to 13% throughout 2025 – a dramatic increase in a relatively short period. The data shows that during the first eight months of the year, American firms and households absorbed as much as 94% of the added costs.
By November, that figure eased slightly to 86%, as foreign exporters began absorbing a modest portion of the burden – roughly 1.4%. Even so, the bulk of the cost remained within the United States.
Import Prices and Consumer Impact
The study found that goods hit with the average 13% tariff experienced import price increases of about 11% compared to untaxed goods. That price differential filtered through supply chains, ultimately affecting business margins and retail prices.
Separate research published by the Kiel Institute for the World Economy in January 2026 reached similar conclusions, estimating that Americans paid 96% of the total tariff burden. Out of roughly $200 billion in tariff revenue collected, about $192 billion effectively came from U.S. entities.
The Congressional Budget Office also reported that foreign companies covered only about 5% of tariff costs. Its breakdown suggested that U.S. businesses absorbed roughly 30%, while the remaining 70% was passed directly on to consumers.
Meanwhile, the Tax Foundation estimated that the 2025 tariffs increased annual costs for the average American household by about $1,000. That figure is projected to rise to approximately $1,300 in 2026 if current policies remain in place.
Supply Chains Adjust
Beyond price effects, the higher tariffs accelerated structural changes in global trade flows. Companies sought to reduce exposure by diversifying production and sourcing away from China, shifting more activity toward countries such as Mexico and Vietnam.
While these adjustments may reshape supply chains over the longer term, the short-term data suggests that the immediate economic strain fell largely on domestic firms and households.
Taken together, the findings from multiple institutions reinforce a consistent message: despite political rhetoric, import tariffs functioned primarily as a domestic tax during 2025, with U.S. businesses and consumers absorbing most of the cost.
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