Study: US Pays for Tariffs, Not Foreign Suppliers, Says Economist Julian Hinz

Tariffs and Their True Cost

• 📊 A study analyzing US import transactions data reveals that import prices have effectively not changed, indicating that US entities are bearing the cost of tariffs.
• 💡 The research suggests that foreign suppliers have not lowered their prices to absorb tariff costs, contrary to arguments made by some administrations.

Impact on US Businesses and Consumers

• 📉 While foreign suppliers are not absorbing tariffs, approximately 80% of the impact is being absorbed by importing firms, eating into their profit margins.
• ⚠️ Only about 20% of the tariff impact has been passed on to US consumers, which has not significantly driven up inflation in goods categories.

Foreign Supplier Behavior

• 🚫 The data indicates that foreign suppliers are not lowering prices to preserve market share in the US, a claim not supported by import transaction data.
• 📉 Instead, tariffs have made it more difficult for US consumers and importers to purchase goods, leading to decreased import volumes.

Countries Most Affected

• 🌍 Countries like India and Brazil are currently paying the highest tariffs, with China also significantly impacted.
• 📈 These nations are naturally the hardest hit due to the substantial tariff rates imposed.

Long-Term Tariff Effects

• ⏳ If tariffs remain in place, it is likely that costs will eventually be passed on to consumers as US firms aim to protect their margins.
• 🤝 Exporting firms may eventually renegotiate contracts to bear some of the tariff costs, though historical data from earlier tariff periods suggests this pass-through effect has remained largely unchanged over time.