House Republicans criticize President Trump over Canada tariffs
The House of Representatives rejected President Trump’s tariffs on Canada by a vote of 219-211, an unusual bipartisan rebuke of the president’s signature trade policies.
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U.S. consumers and businesses paid nearly 90% of the cost of President Donald Trump’s tariffs by the end of 2025, according to a new report from the New York Fed.
The study adds to the growing body of evidence that American households are paying the price of President Trump’s import taxes, despite the president’s claims that all of the economic burden falls on other countries.
A Feb. 6 report from the nonpartisan Tax Foundation found that President Trump’s tariffs would amount to a $1,000 tax increase per household in 2025. Households are expected to pay an additional $1,300 in 2026.
The tariffs represent the largest increase in U.S. taxes since 1993, according to an analysis by the Tax Foundation. Customs duties are taxes, but who pays them?
During his campaign campaign in September 2024 promoting tariffs, President Trump told his supporters, “It’s not going to be a cost to you, it’s going to be a cost to other countries.”
President Trump reiterated this claim in a Jan. 30 op-ed in the Wall Street Journal, writing, “Data shows that the burden of tariffs, or ‘incidence,’ falls overwhelmingly on foreign producers and intermediaries, including large non-U.S. companies.”
A New York Fed study released on February 12 suggests otherwise.
President Trump’s tariffs are primarily taxes on Americans.
According to the study, by August 2025, 94% of import taxes will have been levied on U.S. businesses and consumers. By November, the “pass-through” rate had dropped to 86%.
“In short, U.S. businesses and consumers will continue to bear the bulk of the economic burden of higher tariffs imposed in 2025,” the researchers wrote.
The study confirmed many economists’ predictions that President Trump’s tariffs would primarily be a tax on Americans.
“The New York Fed study confirms what most economists have predicted: that most of the costs of President Trump’s tariffs are being paid by American consumers and businesses,” said Wayne Winegarden, senior economics fellow at the Pacific Institute, a free market think tank.
The Wall Street Journal picked up on the report in a Feb. 13 editorial, saying, “No matter how many times President Trump claims that tariffs are taxing foreigners to make America richer, economic research continues to show that Americans are actually paying the price.”
A paper published in November by the National Bureau of Economic Research found that tariffs increased U.S. inflation by about 0.7 percentage points through the second half of 2025. This means that without the tariffs, inflation could have fallen from 3% to 2.3% in September.
Tariffs are raising the prices of many imported goods.
President Trump’s tariffs have raised the price of many imported goods, and the impact is reflected in January’s inflation report. Prices of home furnishings and supplies increased by 3.8% from January 2025 to January 2026. Furniture and bedding prices rose 4%. Prices of tableware and tableware increased by 5%.
Tariffs are complex. The actual cost is usually split 50-50 between the exporter in one country and the importer in another country.
The New York Fed gave the following example:
Imagine a foreign exporter charges $100 for a product and the U.S. government imposes a 25% tariff. If the exporter does not reduce the price, the importer will pay a $25 duty, increasing the total price to $125. That means 100% of the tax will be passed on to American consumers and businesses.
In the same example, suppose the exporter lowers the price to $80 in response to the tariff. The importer now pays a $20 duty and the total import value remains $100. The exporter absorbs virtually all of the tax.
As it turns out, most exporters didn’t lower their prices much in response to President Trump’s tariffs. A pass-through rate of 94% means that a typical foreign exporter responded to a 10% tariff by reducing prices by 0.6% (6 cents per $10).
As exporters and importers absorbed the impact of President Trump’s tariffs, the impact eased at every step. Some exporters have reduced prices. American companies found cheaper products from other countries or absorbed some of the tariffs themselves.
In the end, about 20% of President Trump’s tariffs actually reached consumers, according to a National Bureau of Economic Research paper.
