Higher taxes on imports can be covered by a combination of the exporting business – the company that sells those imported products to US customers – and US consumers.
Working out the mix of who is paying for what can be complicated, but research centre The Budget Lab at Yale estimates that US consumers have already been paying a substantial portion of the higher tariffs first introduced last year.
Its estimate, external, published before the Supreme Court decision and Trump’s changes, found between 31% and 63% of the additional tariff costs were being passed through to consumers in higher prices for imported goods.
Backing up Yale’s findings earlier this month, the New York Federal Reserve found that US businesses and consumers were paying for nearly 90% of the additional tariffs, external.
While the impact of Trump’s increase to the global tariff rate remains to be seen, it’s likely much of it will be paid by US businesses and consumers.
Following the latest announcements, business groups also said the increased uncertainty would ultimately hurt US consumers when it comes to product choice as well, as exporters look to send more of their products elsewhere.
“Companies are looking at diversifying trade, perhaps more into the European market, into the Indo-Pacific markets which are fast growing, and that may be a lasting effect of the fluctuations we’ve seen in trade policy just in the last four weeks alone,” Bain said.
Bain added that the increase in tariffs for those who continue to export to the US will either have to be absorbed by exporters or their customers in the US.
