US Tariff: Impact on domestic economy, foreign exporters safe
By yash chouhan 2026-01-21 12:44:01
US tariffs hit domestic economy, not foreign exporters
US import tariffs are paid by Americans, not foreign exporters contrary to official rhetoric, according to new research from the Kiel Institute for the World Economy. The study finds that 96 per cent of tariff costs are borne by US importers and consumers, acting like a domestic consumption tax that raises prices, shrinks product variety, and depresses trade volumes.
"The tariffs are an own goal. The claim that foreign countries pay these tariffs is a myth. The data show the opposite: Americans are footing the bill,” said Julian Hinz, research director at the Kiel Institute and one of the authors of the study.
The research, analysing over 25 million shipment records worth nearly $4 trillion, showed US customs revenue rose by around $200 billion in 2025, while foreign exporters absorbed only four per cent of the burden. Trade volumes collapsed, but export prices did not fall, indicating exporters did not offset tariffs through discounts.
Examining unexpected tariff hikes on Brazil and India in August 2025, the study found Indian exports to the US fell by up to 24 per cent in value and volume, while unit prices remained unchanged.
"We compared Indian exports to the US with shipments to Europe and Canada and identified a clear pattern. Both export value and volume to the US dropped sharply, by up to 24 per cent. But unit prices—the prices Indian exporters charged—remained unchanged. They shipped less, not cheaper," Hinz explained.
Researchers conclude that tariffs squeeze US company margins, raise consumer prices, and force exporters to seek alternative markets, ultimately disadvantaging all sides.
