Federal Reserve: US Consumers and Businesses Pay 90% of Tariff Costs

New research contradicts Trump administration claims that foreign companies would bear the burden of tariffs.

Published on Feb. 12, 2026

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According to new research from the Federal Reserve's New York branch, US businesses and consumers paid nearly 90% of the costs of the tariffs imposed during the Trump administration's second term. The study found that while exporters shouldered an increasing amount as 2025 progressed, the majority of the tariff burden fell on American firms and consumers, contradicting the administration's claims that foreign companies would pay.

Why it matters

This research undermines a key justification used by the Trump administration for implementing sweeping tariffs on trading partners. If US consumers and businesses are bearing the brunt of the tariff costs, it raises questions about the economic and political rationale behind the administration's protectionist trade policies.

The details

The New York Fed study analyzed the first 11 months of 2025 and found that the majority of tariff costs were passed through to American firms and consumers. While exporters shouldered an increasing amount over the course of the year, the researchers concluded that 'the bulk of the economic burden of the high tariffs imposed in 2025' fell on US entities.

  • The New York Fed study analyzed the first 11 months of 2025.
  • In August 2025, shortly before the 'reciprocal tariffs' took effect, President Trump posted on Truth Social that 'BILLIONS OF DOLLARS, LARGELY FROM COUNTRIES THAT HAVE TAKEN ADVANTAGE OF THE UNITED STATES FOR MANY YEARS, LAUGHING ALL THE WAY, WILL START FLOWING INTO THE USA.'

The players

Federal Reserve

The central banking system of the United States.

Donald Trump

The former president of the United States who implemented sweeping tariffs during his second term.

Scott Bessent

The US Treasury secretary who acknowledged that US retailers, such as Walmart, have been affected by the decision to raise tariffs to levels last seen in the early 20th century.

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What they’re saying

“BILLIONS OF DOLLARS, LARGELY FROM COUNTRIES THAT HAVE TAKEN ADVANTAGE OF THE UNITED STATES FOR MANY YEARS, LAUGHING ALL THE WAY, WILL START FLOWING INTO THE USA.”

— Donald Trump, Former President (Truth Social)

The takeaway

This research from the Federal Reserve contradicts a key justification used by the Trump administration for implementing sweeping tariffs, raising questions about the economic and political rationale behind the protectionist trade policies. It suggests that the burden of the tariffs has fallen primarily on American consumers and businesses, rather than the foreign companies the administration claimed would pay.