New research shows that most tariff expenses were passed on to US businesses and consumers in 2025
New York, 13 February 2026 — A new economic study reveals that the financial burden of tariffs imposed in 2025 was largely shouldered by US companies and consumers, rather than foreign exporters, highlighting how trade policies can directly influence domestic prices and supply chains.
According to economists at the Federal Reserve Bank of New York, nearly 90 percent of the total economic cost of tariffs ended up being absorbed within the United States. Using trade data through November 2025, the study found that in the first eight months of the year, about 94 percent of tariff-related costs were passed through to American firms and households in the form of higher prices.
What the numbers mean in simple terms
In straightforward language, tariffs were intended to make foreign exporters lower their prices. Instead, the study shows that exporters reduced prices only slightly, while US importers and consumers paid most of the added cost.
By November 2025, foreign exporters were absorbing a bit more of the impact, but still far less than expected. A 10 percent tariff led to only about a 1.4 percent drop in export prices, meaning roughly 86 percent of the cost continued to fall on the US side of the market. Researchers noted that this limited price adjustment shows how tariffs tend to raise domestic costs rather than significantly reduce foreign prices.
How tariff rates changed during the year
The study also tracked how tariff levels evolved in 2025. After early April, the average US tariff rate rose sharply from about 2.6 percent to 13 percent. The largest increases occurred in April and May, driven by short-term spikes in certain imported goods. While later exemptions and supply adjustments reduced the effective duties, the overall economic burden remained largely domestic.
Impact on global supply chains
Beyond prices, the researchers observed notable changes in global supply chains. Higher tariff costs encouraged companies to shift sourcing away from China and toward alternative manufacturing hubs such as Mexico and Vietnam. These adjustments reflect how businesses adapt to rising costs by diversifying suppliers, even if it means restructuring long-established trade relationships.
How the study was conducted
The research team analyzed monthly trade data through November 2025 and applied a statistical method similar to one used in earlier tariff studies. By comparing year-over-year changes in export prices with changes in tariff rates, and accounting for broader global price trends, the economists were able to isolate the direct impact of tariffs on prices.
What this means for businesses and consumers
The findings suggest that tariffs can act much like a hidden cost increase for domestic markets. While designed to influence international trade behavior, they often result in higher prices at home and encourage supply chain realignments rather than significant price concessions from exporters.
As companies continue to navigate cost pressures and supply chain resilience, the study underscores the importance of understanding how trade-related costs ripple through the economy and ultimately affect everyday consumers.
