A comprehensive analysis by the Federal Reserve Bank of New York demonstrates that American corporations and consumers are absorbing approximately 90% of the financial burden resulting from elevated tariffs imposed on imported goods. The research, published Thursday, indicates that the average tariff rate surged dramatically from 2.6% to 13% throughout 2025, marking one of the most significant increases in recent trade history.
The study examined tariff implementations targeting multiple trading partners including China, Mexico, Canada, and the European Union. Contrary to conventional economic expectations, exporting nations maintained stable pricing structures rather than reducing costs to mitigate potential declines in U.S. demand. This pricing strategy resulted in importers transferring additional expenses directly to American consumers through elevated retail prices.
This pattern mirrors outcomes observed during the 2018 tariff implementations during President Trump’s initial term, suggesting consistent economic behavior across different trade environments. The New York Fed’s findings receive substantial validation from parallel international studies.
Independent analysis from Germany’s Kiel Institute for the World Economy, based on examination of 25 million transactions, confirmed nearly complete transfer of tariff costs to U.S. import prices. Their research revealed that major exporters including Brazil and India opted to reduce shipment volumes rather than decrease pricing, resulting in what researchers termed ‘trade volume collapse.’
Supporting evidence from the National Bureau of Economic Research indicated approximately 100% pass-through of tariffs to consumer pricing. Meanwhile, the Tax Foundation, a Washington DC-based policy research organization, characterized the tariffs as effectively constituting a new consumer tax. Their calculations suggest the average American household incurred approximately $1,000 in additional costs during 2025, with projections indicating a rise to $1,300 for 2026.
The Tax Foundation further noted that the effective tariff rate—accounting for reduced purchasing in response to higher prices—currently stands at 9.9%, representing the highest average rate recorded since 1946. According to their analysis, these increased costs will completely offset any potential economic benefits derived from tax reductions included in the administration’s legislative proposals.