New York Fed economists confirm U.S. businesses and consumers are footing Trump’s tariff bill

A Federal Reserve Bank of New York report released Thursday, using data from the U.S. Census Bureau and Foreign Trade Statistics through November 2025, found Americans paid for nearly 90% of the tariffs in 2025, including 94% of the levies from January to August of last year, 92% from September to October, and 86% in November.

“Our results show that the bulk of the tariff incidence continues to fall on U.S. firms and consumers,” the economists wrote. Americans “continue to bear the bulk of the economic burden of the high tariffs imposed in 2025.”

The report authors—Mary Amiti, Chris Flanagan, Sebastian Heise, and David E. Weinstein—explained in their report that over the course of 2025, average tariff rates quintupled from 2.6% to 13%. If foreign firms were the ones paying for the levies, it would be reflected in those companies having to lower prices in order for them to remain the same on American soil once the taxes were applied. Instead, their data reflects that companies exporting to the U.S. have only modestly decreased their prices, leaving it to domestic companies to absorb the increased costs or pass them down to consumers.

Trump has repeatedly asserted other countries looking to export goods to the U.S. are the ones paying for the tariffs. In a Wall Street Journal op-ed last month, Trump said: “The data shows that the burden, or ‘incidence,’ of the tariffs has fallen overwhelmingly on foreign producers and middlemen, including large corporations that are not from the U.S.”

The president’s declaration on the tariffs’ success comes as his trade policy undergoes increased scrutiny. On Wednesday, the House of Representatives passed a resolution, with the support of three Republicans, to overturn the tariffs imposed on Canada out of economic concern. Meanwhile, the Trump administration is awaiting an imminent ruling from the Supreme Court, which will determine the legality of the tariffs on the basis of the International Emergency Economic Powers Act.

Americans have taken note of higher prices as a result of tariffs, and last month, consumer confidence sank to its lowest level in more than 11 years, with survey respondents citing tariffs as one reason for this anxiety.

“Consumers’ write-in responses on factors affecting the economy continued to skew towards pessimism,” Conference Board Chief Economist Dana Peterson said in a statement. “References to prices and inflation, oil and gas prices, and food and grocery prices remained elevated. Mentions of tariffs and trade, politics, and the labor market also rose in January, and references to health/insurance and war edged higher.”

“America’s average tariff rate has increased nearly sevenfold in the past year–yet inflation has cooled and corporate profits have increased,” White House spokesperson Kush Desai said in a statement to Fortune. “The reality is that President Trump’s economic agenda of tax cuts, deregulation, tariffs, and energy abundance are reducing costs and accelerating economic growth.”

Writing on the wall

The tariffs’ impact on American businesses and consumers follows a pattern seen in the tariff impact from Trump’s first term. A 2019 study from the Journal of Economic Perspectives found Americans were paying the full incidence, or cost, of tariffs through 2018, which amounted to an estimated reduction of $1.4 billion per month in aggregate U.S. real income through 2018.

The New York Fed report this week similarly mirrors data from myriad sources, including from the Harvard Business School’s Tariff Tracker, which found that through October 2025, the levies added 0.76% to the Consumer Price Index, or U.S. inflation. The Kiel Institute likewise found foreign exports were absorbing only 4% of the tariff burden, leaving 96% to be eaten by U.S. buyers.

U.S. business leaders have been sounding the alarm on tariffs for months for this exact reason, claiming it would be domestic businesses making the call to either absorb costs at the expense of their own margins, or pass down costs to customers.

Procter & Gamble announced in July 2025 it would raise prices on some of its household products like diapers and skincare due to tariffs. General Motors reported the same month a $1.1 billion profit hit as a result of the levies.

“There’s not much you can do,” Bernstein senior analyst Daniel Roeska told Fortune in July. “If the policy is to put tariffs on cars, then that will increase the cost of cars, and ultimately, that will likely increase the price of cars.”

Taken together, the burden of these levies have outweighed the benefits Trump has claimed the taxes will fund, according to some economists. The president has claimed tariff revenue will pay off the country’s staggering $38 trillion national debt and the administration will be able to dole out $2,000 rebate checks to Americans and provide tax cuts.

Nonpartisan think tank the Tax Foundation found earlier this month the costs of tariffs for U.S. households exceed the benefit of a tax break. The group previously estimated Trump’s tax cut would increase the average return by $1,000 from last year, but calculated that the tariff burden for Americans would swell to $1,300 in 2026, wiping out any benefit from the cuts.

“Tariffs are really holding back the potential of the new tax law, both to deliver relief to taxpayers and to grow the economy,” Erica York, vice president of federal tax policy at the Tax Foundation, told Fortune.