Conclusion
Using high-frequency, shipment-level data covering
over 25 million transactions and nearly
$4 trillion in trade value, we provide unambiguous evidence that US importers bear nearly
all the cost of the 2025 tariffs. Foreign exporters did not meaningfully reduce their prices
in response to US tariff increases. The coefficient on tariffs in our unit value regressions is
approximately −0.04, implying that only 4% of the tariff burden is absorbed by exporters.
The remaining 96% passes through to American buyers.
Event studies around discrete tariff shocks on Brazil and India confirm this finding. Brazil
ian export prices to the US did not fall following the 50% tariff increase in August
2025. Indian export prices—measured directly from customs records at the port of
departure—remained unchanged relative to exports to non-tariffed destinations. In both
cases, exporters adjusted by shipping less, not by cutting prices.
The policy implications are stark.
The 2025 tariffs function as a consumption tax on Ameri
can businesses and households. The $200 billion in additional customs revenue represents
wealth transferred from Americans to the US Treasury, not from foreign producers. The
claim that foreign countries “pay” these tariffs is a myth.
The tariffs are, in the most literal sense, an own goal. Americans are footing the bill