(UNITED STATES) Americans are paying almost the entire bill for Trump’s tariffs, with new research finding that U.S. importers and consumers absorb 96% of the cost while foreign exporters take 4%. That matters immediately for household budgets, for small firms that rely on imported inputs, and for the many visa workers employed in retail, logistics, and import-heavy manufacturing.
The findings come from the Kiel Institute for the World Economy, which analyzed more than 25 million shipment records covering nearly $4 trillion in U.S. imports. Shipment-level data is persuasive because it tracks real transactions, not just averages, and it captures how prices change across product types, suppliers, and ports when tariffs rise.
Who really pays: tariff “incidence” in plain language
A tariff is collected at the border, but the payer on paper is not always the payer in practice. Companies can respond in several ways, and the final burden depends on who has the power to set prices and how easily supply chains can switch.
an import tariff can be absorbed by:
- a foreign exporter, by cutting its price to keep sales;
- a U.S. importer, by accepting lower profit margins;
- a retailer, by trimming markups or changing product mix; or
- consumers, through higher shelf prices or fewer options.
The Kiel Institute analysis points to a dominant outcome: most of the cost is passed into the U.S. market. U.S. customs revenue rising by roughly $200 billion in 2025 alongside falling trade volumes helps explain why.
Even if fewer goods come in, a higher tax rate applied to what still arrives can push revenue up, and that pattern often signals that U.S. buyers are still purchasing at higher tariff-inclusive prices.
For immigration readers, the incidence question is not academic. Import-intensive sectors often employ large numbers of noncitizen workers, including temporary visa holders and employment-based immigrants.
When costs rise, firms may freeze hiring, cut hours, or delay expansion plans, which can affect job mobility and the stability many families need while building a life in the United States 🇺🇸.
2025 tariff hikes: what happened on the ground, and what firms did next
The 2025 increases offered clear test cases for how tariff policy moves through supply chains. Tariffs on Brazil were raised to 50% in August. India’s tariff rate rose from 25% to 50% in August. After those changes, export volumes to the United States fell sharply, including a drop of up to 24% for India.
What did not happen, according to the research, was equally important. Exporters did not broadly cut prices to the United States compared with what they charged in other markets, including Europe and Canada.
That “volume down, prices not down” pattern is consistent with the consumers-pay result: goods become less competitive in the U.S. market because the tariff is layered on top, not because exporters are discounting to offset it.
Julian Hinz, research director at the Kiel Institute and a study co-author, called the tariffs “an own goal.” He framed them as functioning like a consumption tax, shrinking product variety and volume, squeezing U.S. company margins, and lifting consumer prices. Large firms sometimes spread costs across product lines or negotiate better terms. Smaller importers often cannot.
In practical business terms, this is what the transmission looks like:
- Importers renegotiate contracts and delivery terms, sometimes on tight timelines.
- Companies hunt for alternate suppliers, but certification, quality control, and shipping capacity create limits.
- Inventory planning changes, with some firms front-loading shipments and others pulling back because financing costs rise.
According to analysis by VisaVerge.com, tariff-driven supply uncertainty has also increased employer sensitivity around start dates and staffing levels, which can complicate onboarding for newly sponsored workers when budgets tighten.
What the models say: long-run pressure on consumption, wages, and investment
Economic models test different assumptions about who pays and then project how the economy adjusts. If a model assumes full pass-through, it effectively treats tariffs like a tax that reduces household purchasing power, which then ripples into investment and hiring.
The Penn Wharton Budget Model outlines a scenario where consumers bear 100% of the tariff burden, with consumption projected to fall 3.5% by 2030 and remain down by over 3% by 2054. The mechanisms are not just higher prices.
Reduced imports can change capital flows, including lower foreign purchases of U.S. assets, while households divert savings away from productive capital and toward covering higher day-to-day costs.
Even when a model splits costs equally between consumers and businesses, the long-run impacts can intensify through lower capital formation, weaker wage growth, and softer output. For immigration communities, those second-order effects matter because they influence job openings, overtime availability, and the willingness of employers to sponsor workers during uncertain demand.
Sectors that tend to feel these dynamics early include retail, transportation and warehousing, manufacturing that depends on foreign parts, and smaller firms that lack pricing power. Those are also sectors where work authorization, job portability, and employer stability often shape immigration outcomes in very concrete ways.
Near-term price signals: how pass-through shows up, and who gets hit first
Tariff pass-through is a process, not a single event. Contracts lock in prices for weeks or months. Inventory bought pre-tariff can delay shelf-price changes. Then repricing accelerates when older stock clears and new orders arrive at tariff-inclusive cost.
Time reported that 37% of tariff costs had been passed to consumers by August 2025. Goldman Sachs estimated that 55% would reach consumers by January 2026. The gap between those figures reflects timing, not contradiction: pass-through often builds as firms exhaust coping tools like margin cuts, supplier negotiations, and product substitutions.
Small businesses carry disproportionate exposure because 97% of U.S. importers fall into that category. Thin margins leave little room to absorb shocks, and smaller firms often lack hedging tools or alternate supplier networks.
Those pressures can flow into employment quickly. The reporting cited 40,000 job losses in September 2025 tied to the strain on small firms, alongside forced price hikes.
These indicators do not prove a single path for inflation or labor markets. They do show how a tariff shock can move from customs paperwork to paychecks, especially in local economies where a few import-reliant employers dominate hiring.
For readers tracking lawful status, it is a reminder that macro policy can shape micro timelines. A delayed expansion can mean fewer seasonal hires. A price spike can reduce store traffic. A cut in hours can push workers to seek second jobs, which may carry immigration compliance risks depending on visa type.
For official background on how duties are assessed at the border and how importers interact with federal agencies, U.S. Customs and Border Protection maintains a public overview at CBP’s “Importing into the United States”.
Wider trade and macro effects, plus the next tariff risk on company balance sheets
The broader pattern described in the research and related reporting is trade volumes falling without exporters cutting prices proportionally. Sticky pricing, limited ability to discount, and alternative markets outside the United States 🇺🇸 can all play roles.
The result is a re-routing world: exporters look for new buyers, while U.S. firms redesign supply chains, switch inputs, or reduce product lines.
Over time, the channels stack up: slower growth, higher consumer prices, and softer labor markets. Employers facing higher input costs may delay capital spending, which can restrain productivity gains that normally support wage growth. Workers feel that drag through fewer promotions, slower raises, and tighter job switching.
Banks and analysts also track headline risk because tariffs can change quickly and force sudden repricing. J.P. Morgan pointed to ongoing tariff risk, including a potential 200% rate on pharmaceuticals by mid- to late-2026, tied to negotiations.
Even before any change takes effect, planning for it can reshape sourcing, hiring, and investment decisions across health-adjacent supply chains, from packaging to cold-chain logistics.
