Americans Are the Ones Paying for Tariffs, Study Finds

https://www.wsj.com/economy/trade/americans-are-the-ones-paying-for-tariffs-study-finds-e254ed2e

by throw0101d • 6 months ago

188 80 6 months ago

wsj.com

throw0101d2• 6 months ago

https://archive.is/https://www.wsj.com/economy/trade/america...

https://archive.is/lvQHh

ChrisArchitect• 6 months ago

[dupe] Discussion: https://news.ycombinator.com/item?id=46680212

artemonster• 6 months ago

I am checking conservative echo chambers from time to time and find it ridiculous that they always find a positive spin on all the obvious grifting and destruction that is happening around them. we are witnessing the downfall of an empire with our own eyes and can do absolutely NOTHING

conductr• 6 months ago

I build homes and so am adjacent to many blue collar Trump fanatics, here's the thing I constantly hear;

My tool for X used to cost $500 or $2000. The $500 was imported and good enough for me. I could never justify spending $2000 on the Made in USA version although it was very well built and I wanted it. Now, with tariffs, the import costs $1800, so it's easy for me to justify spending $2000 on the Made in USA option. Trump got me to buy American and support American manufacturing. Go MAGA!

It's strange how if the same economic condition existed due to a Biden (or any liberal presidents term) they surely would have been villainized for eliminating ANY lower cost option, increasing the cost of business (when tools cost more, everything they create costs more), and simply stealing food from people's families (as the $1500 extra he spent would have presumably remained in this contractor's profits in the pre-tariff reality not to long ago). It takes massive mental gymnastics to view this as beneficial and anything other than a direct tax on American consumers. The brain washing rhetoric of conservative media is an extremely powerful weapon.

asterix_pano• 6 months ago

is there really nothing to do?

kayamon• 6 months ago

"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."

neon_me• 6 months ago

Best part is how "west" wants Russians public to revolt against tyranny while we boil like a frogs ... And do absolutely nothing.

ahallock• 6 months ago

Are we getting income tax breaks then?

toomuchtodo2• 6 months ago

Oh no no, we still have tax cuts for the wealthy, $800B in debt servicing, and $1T/year in military spending to pay for. The tariffs were a regressive tax to compensate for the tax cuts for the wealthy.

Ajedi32• 6 months ago

Even with 90B in tariffs collected this fiscal year (since October) the government still spent 600B more than they collected.[1][2] Tax cuts would be great, but if you cut taxes without cutting spending you're just borrowing that tax cut from future generations. (270B of that 600B hole is interest payments on debt incurred by previous generations doing exactly that to us.)

[1] https://fiscaldata.treasury.gov/americas-finance-guide/gover...

[2] https://fiscaldata.treasury.gov/americas-finance-guide/feder...

hypeatei2• 6 months ago

In two weeks, just like the DOGE checks. Mark your calendar, two weeks.

throw0101d2• 6 months ago

In two weeks, just like the DOGE checks. Mark your calendar, two weeks.

Is this before or after Infrastructure Week:

* https://politicaldictionary.com/words/infrastructure-week/

kelseyfrog• 6 months ago

No.

It's like punching yourself in the face and then taking Tylenol for the pain until your friends do what you want. It's psychotic, doesn't work, and they're probably not going to want to hang out until you get some help.

kshri2410• 6 months ago

Far from getting a break, you guys are paying tax on tax. You indirectly pay for import taxes every time your companies import raw materials needed to finish their goods (added value) and then that final value (cost of import + added value) has its own sales tax. AFAIK there are no input credits for US sales tax. Then you also have VAT but at least VAT is only on the added value.

Income tax is way better as you can reduce the tax burden by including expenses/deductions. You cannot do the same for tariffs, sales tax and VAT as an end consumer. VAT is only beneficial to businesses as they can subtract inputs from outputs.

spwa4• 6 months ago

Republicans elected a president on the promise of introducing a new tax. Can't make this shit up.

AnthonyMouse13• 6 months ago

You indirectly pay for import taxes every time your companies import raw materials needed to finish their goods (added value) and then that final value (cost of import + added value) has its own sales tax.

This isn't really any different than any other kind of taxes. You pay income tax and then pay sales tax using the money that was already taxed as income. The construction company pays sales tax when it buys a backhoe, which increases construction costs and therefore real estate prices, and then you pay property tax on the higher real estate prices, and make the bigger mortgage payment with money that was already taxed as income.

The only way you'd really get something different with tariffs is if the supply chain for some product passes through the local country multiple times, i.e. it gets imported, exported and then imported again. Which probably happens occasionally but isn't the common case.

Meanwhile how many times something is taxed isn't really the relevant thing. It's, how much in total are you paying in taxes? If you pay ~10% three times, that's not really any worse than paying ~33% once. It is, of course, worse than paying 10% once.

danaris3• 6 months ago

The US has no VAT.

WheatMillington• 6 months ago

Of course... who did you think would pay?

betaby• 6 months ago

Because Canadian government gives money to some industries to pay for tariffs. It's called Regional Tariff Response Initiative (RTRI).

MichaelBurjack• 6 months ago

Based on my (limited) understanding of RTRI, they have very specific items they fund and pretty low overall impact to the trade balance ($1M per org and $1B over 3 years program total across all industries). From [1]:

----------

Productivity improvement:

- investing in digitization, automation, or technology to enhance business productivity and competitiveness

- reshoring production, research & development (R&D) operations, recruiting highly qualified personnel (HQP) and expertise

Market expansion and diversification:

- developing and diversifying markets to help businesses find new customers

- business support, market development and diversification, and guidance services (e.g., advice for businesses from a sectoral expert organization)

Strengthening supply chains and trade resilience:

- optimizing supply chain logistics and ensuring compliance with standards to gain market access and/or enhance sales

- strengthening domestic supply chains and facilitating internal trade to increase the resilience of businesses and reliability of domestic markets

----------

This $1B program — even if it all went straight to subsidizing tariffs on Canadian imports — would be a pretty small rounding error out of the total $200B raised through tariffs from the article.

If anything, RTRI funds are largely about efficiency and pivoting to new markets. While there may be some outcomes that result in producers being able to lower their export costs, they're not "paying for" US tariffs.

Edit: formatting.

1: https://www.canada.ca/en/prairies-economic-development/servi...

AngryData• 6 months ago

But that still doesn't reduce the cost to US customers, it just means the Canadian businesses gets a subsidy to make up for reduced sales.

bdangubic• 6 months ago

Mexico?

AnthonyMouse13• 6 months ago

who did you think would pay?

The general premise of tariffs is that a foreign product costs e.g. $100 whereas a domestic product costs $120. If you then put a 50% tariff on the foreign product, it would cost $150, and then people would prefer the domestic product and only be paying 20% instead of 50%. Moreover, they might prefer the domestic product in general (e.g. higher quality and/or patriotism) and only buy the foreign product if it's actually less expensive, and then the foreign manufacturer would have to lower their price from $100 to $70 so that the tariff only raises the price to $105 because any higher price than that and they lose the business.

The result, in theory, is that you would pay $5 more rather than $50 more. Meanwhile the government collected $35 in tariffs on the foreign product, $30 of which came from the manufacturer rather than you, and that allows the government to lower your other taxes by $35 at the same level of government spending and borrowing.

There are essentially two things required for this to work in your favor on net: 1) the tariffs cause the foreign manufacturer to lower their pre-tariff prices at all, and 2) the government uses the tariff revenue instead of some other taxes they would have collected directly or indirectly from you, so that your net tax burden stays the same. It can also be some mix of these, e.g. the foreign manufacturer lowers their price by $10, you pay $15 in tariffs and get a $10 reduction in other taxes, and then you're ahead by $5.

Ironically, the primary way domestic taxpayers end up paying more is if the tariffs succeed in causing people to buy domestic products, because then there is no tariff revenue on the domestic products and people pay the higher price for the domestic products without a reduction in other taxes.

kshri2410• 6 months ago

whereas a domestic product costs

There is hardly anything that is made domestically in the US. So the premise falls apart almost immediately. This premise works great for India where domestic production exceeds exports by massive margins and the economy depends mostly on domestic economy. It does not work for US where there is hardly any domestic production and is totally import driven economy.

readthenotes12• 6 months ago

"The general premise of tariffs is that a foreign product costs e.g. $100 whereas a domestic product costs $120."

The analysis following seems to think that the tariff is placed upon the retail price of the goods as opposed to the production cost, which excludes marketing, final transportation, storage, r&d, domestic staff costs, profit, etc.

A more important aspect not mentioned is getting rid of the de minimis exemption that allowed people to ship stuff tariffs-- free into the US as long as they declared the value less than $750.

vannevar• 6 months ago

I think we all understand how tariffs are intended to work. The problem is that we also know from experience that this is not how they work in practice, and historically are associated with negative economic outcomes overall. The findings described in the article appear consistent with past negative experience.

One correction regarding the tax impact: since tariffs are a flat tax and not progressive, to the extent that they displace progressive income tax, the net tax burden on the average taxpayer would increase, not remain the same.

duskwuff3• 6 months ago

There's a third requirement which you've glossed over somewhat: a domestic manufacturer of that product needs to exist. For many of the products which are currently the subject of US tariffs, domestic manufacturing is nonexistent, or is itself impacted by tariffs on imported materials.

maxerickson• 6 months ago

What happens if you avoid conflating cost and price and also assume that pricing is vaguely competitive, rather than cartoonishly favorable to tariffs?

wolvoleo3• 6 months ago

Exactly. This sounds more like an onion headline, lol

kshri2410• 6 months ago

You really don't need ANY study to know the obvious thing that tariffs are taxes on imports. It is being paid by Americans from DAY 1. The only difference being American Companies were taking the brunt of it all and it is now obvious that they cannot keep swallowing it and will eventually pass it on to the American consumers.

It is crazy that so many in US STILL think tariffs are being paid for by exporting countries.

US is sabotaging itself and pushing in the same "New World Order" that the right-wing conspiracy nuts kept warning about but ironically have been instrumental in accelerating it themselves anyways.

Or maybe that was the design all along. To not go out in a whimper but with a big bang.

If I were the Democrats, I would do nothing and just let the US admin destroy whatever little credibility it has left on the World stage... thereby securing mid-terms and the next Presidential elections.

hypeatei2• 6 months ago

It is crazy that so many in US STILL think tariffs are being paid for by exporting countries.

They knew it was a lie then, and they know it's one now. A plurality of voters want what's happening currently, they're not crazy, it's just a mix of xenophobia, isolationism, and inbreeding.

wolvoleo3• 6 months ago

If I were the Democrats, I would do nothing and just let the US admin destroy whatever little credibility it has left on the World stage... thereby securing mid-terms and the next Presidential elections.

Not a great idea. The US will have lost a lot of political goodwill by then. And given up a lot of geopolitical status and influence. The devices will be back in the saddle but have to resort to really unpopular measures to clean up the mess, basically guaranteeing a republican win afterwards.

And some credibility and influence will never recover. The rest of the world will remember there can always be another trump. And they will have switched to (and restarted) local industries. Once those are running there's no incentive to look at US ones again. And any geopolitical influence that was lost will already have been filled by other players who will entrench themselves.

kshri2410• 6 months ago

The US will have lost a lot of political goodwill by then

Not really. All Governments across the World have undergone similar crisis in their own Countries, in different points in time in their own history, and know well to differentiate an erratic Government from its populace. I bet no one has ill-will towards Americans (unless you are into terrorism) and so will obviously want to mend ways once a better admin is elected and put in place.

The issue really though is not about political goodwill. It is about business that gets moved elsewhere. Once moved, it is really hard to bring it back. So US will then have to make a lot of concessions when it comes to that. The reason rest of the World is upset with the new tariff regime is not because they are being affected by it monetarily (which they actually are not), but because they do not want to sever a well established system and go looking for new buyers/sellers. For example, China decided to stop buying soybeans from US (after Trump threatened tariffs) and switched to buying from Argentina. Now once a new US admin is in place, it will have to give a better deal for China to switch its already established supply chain with Argentina to US again. Inertia is a good thing in trade. Infact, I feel it is even more important than building a moat. People are willing to continue paying higher price (even if something cheap is available elsewhere) because they do not want to go through the hassle of moving away from already established supply-chains and renegotiate new deals.

really unpopular measures to clean up the mess

Agreed.

Once those are running there's no incentive to look at US ones again

They will if US comes with better deals. This is the "unpopular measures to clean up the mess" you were pointing to earlier. Right now there is a mismatch between what US is actually worth and what it is projecting. I am not saying it is not a superpower anymore. It still very much is. But it is failing to recognize the rise of great powers in the rest of the World. And is unable to reconcile with multi-polarity that has already arrived and exists. As long as US is in denial of this reality, it will continue to make mistakes.

And any geopolitical influence that was lost will already have been filled by other players who will entrench themselves

I agree but I'll go further and argue that the Trump admin is behaving erratically because it has realized it has lost geopolitical influence and that other players have already entrenched themselves. Trump has diagnozed the problem correctly (that US has lost its hegemony in many areas) but has no expertise (or even experts around him) to advice him on the right course of action.

danaris3• 6 months ago

The problem with that last is that if the Democrats do nothing, there's a very real chance that Trump deploys the military to either prevent the midterms from happening, or to force their outcome to be what he wants.

(Of course, if they do something there's still a chance he does that—they have to do the right thing and they have to do it well to reduce the chances by much!)

There's also that pesky matter of, y'know, their constituents. Who are getting bled dry by the stagflation that's happening.

hnburnsy4• 6 months ago

You really don't need ANY study to know the obvious thing that tariffs are taxes on imports. It is being paid by Americans from DAY 1. The only difference being American Companies were taking the brunt of it all and it is now obvious that they cannot keep swallowing it and will eventually pass it on to the American consumers.

I say they exact same thing to my liberal friends who endorse corporate tax increases, but they don't think it is obvious that companies will eventually pass it on to the American consumers.

kshri2410• 6 months ago

Corporate tax or even personal income tax is not the same as tax on cost of the product itself. As a corporate, I can structure my expenses in such a way that I never pay tax irrespective of whether the tax rate is 10% or 50%. There are ways to do that (through deductions/expenses/investments in assets that can be depreciated and included as expenses etc) and even defer my earnings over a period of time. You have various ways to reduce final tax liability.

You cannot escape paying tariffs or sales tax as it is levied on the product you are purchasing. It is not a tax that is levied AFTER you have calculated your income.

TruffleLabs• 6 months ago

Duh!

jurschreuder• 6 months ago

The only threat that works against Trump doing destructive things is to say to build a slightly bigger white house for Biden to feature him in a reality show and put him on the front page on a full page and Trump on a the second page at a half page.

KevinMS• 6 months ago

Same with corporate taxes, its just targeted a different way.

josefritzishere• 6 months ago

duh

1attice• 6 months ago

Unflag this. Tariffs are a tech story.

ryan_lane4• 6 months ago

Why is this flagged? Why are things critical of this administration usually flagged? Moderation on HN is a joke.

misnome2• 6 months ago

It’s not really anything to do with tech though, is it?

“This doesn’t belong here” is perfectly valid reaction to stuff covered on a million other sites.

aaarrm• 6 months ago

It doesn't need to be tech. From the Guidelines section of HN:

On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity.

Off-Topic: Most stories about politics, or crime, or sports, or celebrities, unless they're evidence of some interesting new phenomenon. Videos of pratfalls or disasters, or cute animal pictures. If they'd cover it on TV news, it's probably off-topic.

ArtemZ2• 6 months ago

Is HN really a place to criticize administration?

As for tariffs, SmarterEveryDay has proven that we need them with his smart grill scrubber that got destroyed by cheap Chinese copycats the moment it became popular.

I'm working on a smart air quality monitor, I don't want competition with the Chinese either.

ryan_lane4• 6 months ago

Is HN really a place to criticize administration?

Articles critical of economics policies aren't criticizing the administration, but the policies. Yes, economic policies are of interest to technology, and articles related to it are of interest to us.

Even ignoring the fact that an article critical of a policy isn't specifically critical of the administration, yes, HN is really a place to criticize any administration.

I don't want competition with the Chinese either.

You also only want to be able to sell your goods in the US? Because the outcome of tariffs is retaliatory tariffs, which will considerably reduce your available market. No matter what you're going to have competition from China, and tariffs ensure markets outside of the US will be more dominated by them.

If your product can so easily be duplicated, and for cheaper, it's probably not a great product.

hnburnsy4• 6 months ago

It is a dupe

hnburnsy4• 6 months ago

Problems with this study...

Short Time Horizon for Data Analysis: The study relies on data from January 2024 to November 2025, covering only about 7-8 months after the April 2025 tariff announcements. This captures primarily short-run effects, where pass-through to import prices is often high (near 100%), but longer-term adjustments could lead to greater absorption by foreign exporters. For instance, studies of the 2018-2019 trade war, such as Amiti, Redding, and Weinstein (NBER Working Paper 26610, 2019), found that initial pass-through was complete but declined over time in sectors like steel (falling to around 50% after a year). The Kiel analysis may overstate long-term incidence on U.S. buyers by not accounting for delayed responses like supply chain reorganization or price negotiations.

Incomplete Data Coverage: The dataset from Panjiva includes only ocean-freight shipments (over 25.6 million transactions valued at $4 trillion), excluding air and land imports. This omission could bias results, as air freight often involves higher-value goods with different pricing dynamics, and land imports (e.g., from Mexico or Canada) might respond differently to tariffs. Broader U.S. import data from sources like the Census Bureau show that ocean freight accounts for a significant but not comprehensive share of trade, potentially skewing estimates of overall pass-through.

Reliance on Unit Values as Price Proxies: Import prices are measured as unit values (value per kg), which can be confounded by changes in product quality, mix, or shipping costs rather than true price adjustments. The authors acknowledge this as a potential issue and use validations like Indian FOB export data, but critics of similar studies (e.g., in the 2018-2019 trade war analyses by the U.S. International Trade Commission) note that unit values often overestimate pass-through by not distinguishing between price changes and compositional shifts. This could inflate the estimated 96% pass-through rate.

Weak Statistical Significance in Key Estimates: The baseline regression coefficient (β = -0.039) indicating 96% pass-through is only statistically significant at the 10% level, which is below conventional thresholds (5% or 1%) in economic research. This suggests the result may not be robust to minor specification changes or data noise, raising questions about the reliability of the claim that exporters absorb less than 4% of the burden.

Aggregation Masks Heterogeneity: The study reports an aggregate pass-through estimate but does not break it down sufficiently by product, country, or sector. Research on prior tariffs (e.g., Fajgelbaum et al., NBER Working Paper 25638, 2019) shows significant variation: undifferentiated goods like commodities may see more exporter absorption, while differentiated consumer goods exhibit fuller pass-through. By pooling data, the analysis may overlook these differences, leading to overly generalized conclusions.

Focus on Border Prices Without Retail Pass-Through Analysis: The paper examines pass-through at the border (to importers) but extrapolates to consumers bearing "nearly all the cost" without direct evidence on retail prices. Studies like Cavallo et al. (NBER Working Paper 26396, 2019) and the Federal Reserve Bank of Boston (Working Paper 19-12, 2019) find that while border pass-through is near-complete, retail pass-through is partial (around 50-80%), with retailers absorbing some costs through reduced margins. This gap could mean the study overstates the ultimate burden on end consumers, ignoring supply chain buffers.

dur-randir• 6 months ago

Please refrain from posting an AI slop.

chaos0815• 6 months ago

You needed a study for that conclusion?

Americans Are the Ones Paying for Tariffs, Study Finds

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