US tariffs impact importers and consumers through regressive costs

New economic analysis examines the distribution of costs associated with United States tariffs. A study by economist Caroline Freund suggests that foreign exporters have absorbed 47 percent of the tariff burden, while US importers have paid 53 percent. This finding indicates a lower pass-through rate to importers than previously estimated by other studies.

Beyond the direct costs to importers, tariffs are noted for their regressive impact on the economy. For example, tariffs on essential goods, such as those placed on Canadian imports like toilet paper, disproportionately affect lower-income households. Similar to gasoline price increases, these costs consume a larger share of income for families in the bottom 50 percent of the income distribution compared to those in the top 10 percent, contributing to a K-shaped economic reality.