Scott Lincicome and Nathan Miller
On the issue of who’s paying the president’s tariffs, the Trump administration has had a rough few weeks. Research keeps confirming what conventional economics has always predicted and what the administration has always denied: Americans pay America’s tariffs. Yet rather than reckon with this unsurprising-yet-inconvenient conclusion, White House officials have responded with misdirection, insults, and even a televised suggestion that some of the professional economists involved be punished.
First up, White House Senior Counselor for Trade and Manufacturing Peter Navarro took to the Wall Street Journal to list—with a conspicuous lack of evidence—the various ways in which foreign exporters might absorb US tariffs, leaving American companies and consumers off the hook. Yet as Lincicome pointed out in a new letter to the Journal, Navarro is correct that foreigners could theoretically bear tariffs’ economic burden by lowering the all-in price they’d accept from US customers. But in reality there’s little evidence of this having broadly occurred last year. Instead of declining, in fact, nonfuel import prices—which include discounts and rebates but not tariffs paid at the border—were slightly up:
With effective tariff rates as high as 10 percent, we calculate that exporters would need to cut their prices roughly 8 percent to fully absorb these new taxes. Yet, as the chart above shows, nonfuel import prices haven’t budged from their pre-tariff trend, indicating that tariff costs have generally been borne by US-based companies and consumers, not foreigners. The burden rests squarely on Navarro and others to demonstrate otherwise—something they’ve utterly failed to do beyond a few meaningless anecdotes.
More rigorous economic research confirms our conclusion. We now count at least seven independent studies since October 2025 that have examined the available data, and all have found that Americans are bearing most of the tariffs’ economic burden, including through higher retail prices.
Navarro singled out two of these papers for failing to account for the possibility of foreigners paying the tariffs, yet both already controlled for the very thing he quibbled with. Now, Navarro’s colleague, National Economic Council Director Kevin Hassett, has escalated things even further, calling one paper from economists at the Federal Reserve Bank of New York “the worst paper I’ve ever seen in the history of the Federal Reserve system” and saying the authors should be “disciplined” for their work. His main argument: The authors didn’t consider how import volumes might decline in response to tariffs, thus boosting US output (“maybe at a higher price”) and helping American workers at the factories making that stuff.
Leaving aside Hassett’s troubling smear of these reputable economists for having the gall to do their jobs free of political spin, his claims are simply wrong. For starters, the New York Fed economists expressly did consider changes in import volumes—one of their exhibits is literally titled “China’s Share of U.S. Imports Has Fallen Markedly.” Their paper’s methodology was also sound, as it was based on their peer-reviewed examination of US tariffs imposed in 2018–2019. For both tariff episodes, they found US companies and consumers absorbed the vast majority of the tariff burden—though a little less in 2025 (90 percent) than in 2018 (100 percent). Finally, Hassett’s quiet acknowledgment that US producers would charge a little more for goods now subject to tariffs supports new research (e.g., from Harvard Business School) showing that the retail prices of domestic items have also increased in price this year—another unsurprising result.
In short, seven independent research teams have now examined the “who’s paying” question and have reached essentially the same answer: We are. The White House can attack the messengers, but it can’t change the data—and at this point, the data speaks for itself.
