Three of the world’s most credible economic research institutions — JPMorgan Chase Institute, the New York Federal Reserve, and the Kiel Institute for the World Economy — have independently reached the same damning conclusion: American businesses and consumers are paying between 90 and 96 percent of the costs generated by the Trump administration’s tariffs. That is not a partisan talking point. It is the consensus finding of researchers who analyzed millions of real trade transactions, customs records, and firm-level financial data throughout 2025. The claim that foreign countries are footing the bill for these tariffs is, by every available measure, false. The numbers are stark.
The Kiel Institute, after examining more than 25 million shipment records covering nearly $4 trillion in U.S. imports, found that 96 percent of tariff costs landed on American importers and consumers. The New York Fed pegged the figure at nearly 90 percent for 2025 overall, with the share borne by Americans reaching as high as 94 percent in the first eight months of the year. JPMorgan’s research arm documented the real-world fallout: tariff payments by midsize American firms roughly tripled during 2025, hammering companies that collectively employ 48 million people. This article breaks down each institution’s findings, explains why the “other countries pay” narrative has no empirical support, and examines what this means for American households and businesses going forward.
Table of Contents
- What Did JPMorgan, the NY Fed, and the Kiel Institute Actually Find About Who Pays Tariff Costs?
- How Did Tariffs Hit Midsize American Businesses the Hardest?
- What Happened When Tariffs Were Raised on Brazil and India?
- How Much Are Tariffs Actually Costing American Households?
- Why Does the “Other Countries Pay” Claim Persist Despite the Evidence?
- What Does the $200 Billion in Customs Revenue Actually Mean?
- Where Do Tariff Costs Go From Here?
- Conclusion
- Frequently Asked Questions
What Did JPMorgan, the NY Fed, and the Kiel Institute Actually Find About Who Pays Tariff Costs?
The convergence of these three studies is unusual and worth underscoring. These are not advocacy organizations. The New York Federal Reserve is part of the U.S. central banking system. The Kiel Institute is one of Europe’s oldest and most respected economics research centers. JPMorgan Chase Institute draws on proprietary transaction data from one of the largest financial institutions on earth. When all three independently reach the same conclusion — that Americans are absorbing the vast majority of tariff costs — that finding carries significant weight. The NY Fed study, published on its Liberty Street Economics blog on February 12, 2026, broke the numbers down by period.
From January through August 2025, American companies and consumers bore 94 percent of tariff costs. That figure dropped slightly to 92 percent in September and October, and to 86 percent in November, as some foreign exporters began absorbing a marginally larger share late in the year. But even at its lowest point, Americans were still paying the overwhelming majority. The NY Fed economists noted that their findings are consistent with research from the nonpartisan National Bureau of Economic Research and the Kiel Institute — a rare instance of near-total agreement across independent studies. The Kiel Institute’s January 2026 Policy Brief, titled “America’s Own Goal: Who Pays the Tariffs?”, went further. Its analysis of shipment-level data from January 2024 through November 2025 found that 96 percent of tariff costs were paid by U.S. importers and consumers, with foreign exporters absorbing only about 4 percent. That title — “America’s Own Goal” — is not editorializing. It is a factual description of the data.
How Did Tariffs Hit Midsize American Businesses the Hardest?
JPMorgan Chase Institute’s research focused on a segment of the economy that often gets overlooked in tariff debates: midsize firms, defined as those with $10 million to $1 billion in revenue or 50 to 499 workers. These are not Fortune 500 giants with armies of trade lawyers and the leverage to renegotiate supply chains overnight. They are manufacturers, distributors, retailers, and service companies that form the backbone of local economies across the country — and they collectively employ 48 million Americans. According to JPMorgan’s findings, tariff payments by these midsize firms roughly tripled during 2025, beginning with the April 2025 “Liberation Day” tariffs. These companies are disproportionately exposed to tariff increases because 21 percent of their imports come from China, which is now subject to a 55 percent tariff rate. Outflows from midsize U.S.
firms to China dropped approximately 20 percent since 2024, suggesting that many businesses are scrambling to find alternative suppliers — a process that is neither quick nor cheap. Rerouting supply chains involves new vendor qualification, shipping logistics, quality testing, and often higher per-unit costs from less established suppliers. Here is the number that should concern anyone who employs or works for a midsize company: JPMorgan estimated that full implementation of universal tariffs could add up to $187.7 billion in direct import costs for midsize firms alone. That figure represents more than six times their pre-2025 tariff costs. However, it is important to note that this is a ceiling estimate assuming full implementation and no further supply chain adjustments. Some firms will adapt, some will pass costs to consumers, and some will absorb losses. But “some firms will adapt” is cold comfort when the starting point is a tripling of costs that has already occurred.
What Happened When Tariffs Were Raised on Brazil and India?
One of the most valuable aspects of the Kiel Institute’s research is its case study approach. Rather than relying solely on aggregate data, the researchers examined what happened when tariffs on specific countries were sharply increased — providing a natural experiment that tests the “foreign exporters will lower their prices” theory in real time. In August 2025, the trump administration raised tariffs on Brazil and India to 50 percent. If the administration’s theory were correct — that foreign exporters would slash their prices to maintain access to the American market — you would expect to see unit prices from these countries drop significantly. That is not what happened. The Kiel Institute found that unit prices charged by Brazilian and Indian exporters remained unchanged after the tariff increase. Export volumes to the United States dropped by up to 24 percent, meaning these countries simply sold less to America, but they did not discount their products.
Every dollar of the added tariff cost fell on American buyers. This finding matters because it dismantles the specific mechanism by which tariffs were supposed to be painless for Americans. The argument was always that foreign countries would eat the cost to keep selling into the U.S. market. Brazil and India did not do that. They accepted lower sales volumes instead. American importers who still needed Brazilian and Indian goods paid the full tariff markup, and those who switched suppliers typically found that alternatives were not cheaper once you factored in the disruption costs.
How Much Are Tariffs Actually Costing American Households?
Translating aggregate trade data into household impact requires careful analysis, and several organizations have attempted it. The Tax Foundation estimated that the tariff burden for Americans would reach $1,300 per household in 2026. To put that in perspective, the accompanying tax cuts passed by the administration provide roughly $1,000 in benefit per household — meaning the tariffs more than wipe out the tax savings. For a policy package that was sold partly as an economic boost for working families, this is a significant problem. The Congressional Budget Office, which serves as Congress’s nonpartisan scorekeeper, independently determined that Americans and U.S. importers pay 90 to 95 percent of Trump’s tariff duties. This aligns closely with the NY Fed and Kiel Institute findings and further reinforces that the consensus is not confined to any single methodology or institution.
When the CBO, the Fed, an international economics institute, and a major bank’s research arm all reach the same conclusion using different data and different approaches, the finding is about as settled as empirical economics gets. There is, however, a tradeoff worth acknowledging. U.S. customs revenue surged by roughly $200 billion in 2025, according to the Kiel Institute’s data. That is real government revenue that could theoretically offset other taxes or fund public spending. But the revenue is coming directly from American importers — and ultimately from American consumers through higher prices — so it functions as a consumption tax that falls disproportionately on goods-dependent households and businesses. Whether that tradeoff is worthwhile depends on what the revenue is used for, and so far, there has been no clear accounting of how the additional customs revenue has been allocated.
Why Does the “Other Countries Pay” Claim Persist Despite the Evidence?
The persistence of the claim that foreign countries pay for tariffs is worth examining because it reflects a fundamental misunderstanding of how tariffs mechanically work. A tariff is a tax assessed at the U.S. border, paid by the U.S. importer of record. The foreign exporter does not write a check to U.S. Customs and Border Protection. The American company that imports the goods does. The only way foreign exporters “pay” tariffs is indirectly, if they lower their prices enough to offset the tariff — and as the Kiel Institute’s research on Brazil and India demonstrated, that is not happening in any meaningful way.
The Federal Reserve Board of Governors published a March 2026 study titled “The Slow Climb: How Tariffs Gradually Raised Retail Prices in 2025,” which documented the transmission mechanism from border taxes to store shelves. The word “gradually” matters here. Tariff costs do not show up in consumer prices overnight. They work through supply chains over weeks and months, which makes it easy for officials to deny the connection in the short term. By the time prices visibly rise, the policy has been in place long enough that other factors can be blamed. But the Fed’s research traced the price increases directly to tariff implementation timelines. One limitation of all these studies is that they measure direct tariff costs. They do not fully capture the indirect costs of trade uncertainty — canceled investment, delayed hiring, supply chain disruptions, and the general drag on business confidence that comes from unpredictable trade policy. The actual economic cost of the tariff regime is almost certainly higher than the 90-to-96 percent pass-through figures suggest, because those figures only measure the tariffs themselves, not the broader economic distortions they create.
What Does the $200 Billion in Customs Revenue Actually Mean?
The Kiel Institute’s finding that U.S. customs revenue surged by roughly $200 billion in 2025 is often cited by tariff supporters as proof the policy is working. But this framing ignores where that money comes from. Every dollar of that $200 billion was paid by an American importer, who either absorbed the cost (reducing profits and potentially wages or hiring) or passed it on to American consumers through higher prices. It is not foreign money flowing into U.S.
coffers. It is American money being redirected through a border tax. For comparison, $200 billion is roughly the annual budget of the U.S. Department of Veterans Affairs. It is a substantial sum. But collected as an opaque consumption tax that disproportionately burdens goods-heavy industries and lower-income households who spend a larger share of their income on physical products, it is one of the least efficient and least transparent ways to raise government revenue.
Where Do Tariff Costs Go From Here?
The trajectory is not encouraging for American businesses and consumers. JPMorgan’s estimate that full implementation of universal tariffs could add up to $187.7 billion in direct import costs for midsize firms alone — more than six times pre-2025 levels — represents a scenario that has not yet fully materialized. If additional tariff rounds are implemented or existing tariffs are increased, the burden will grow.
The NY Fed data showed a slight trend toward foreign exporters absorbing more cost late in 2025, with the American share dropping from 94 percent to 86 percent by November, but that still leaves Americans paying the overwhelming majority. The longer tariffs remain in place, the more permanent the damage becomes to established trade relationships. The 20 percent drop in midsize firm outflows to China documented by JPMorgan represents real supply chain severing that cannot be easily reversed. Some diversification away from China may have strategic value, but it comes at a quantifiable cost — and the evidence from every major institution that has studied the question confirms that cost is being paid almost entirely by Americans, not by the foreign countries the tariffs are supposedly targeting.
Conclusion
The empirical record is now extensive and consistent. The New York Fed found Americans paying nearly 90 percent of 2025 tariff costs. The Kiel Institute put the figure at 96 percent after analyzing 25 million shipment records. JPMorgan documented a tripling of tariff payments by midsize firms employing 48 million people. The Congressional Budget Office landed at 90 to 95 percent. The Tax Foundation calculated a net cost of $1,300 per household, exceeding the benefit of accompanying tax cuts.
These are not estimates from a single study or a single methodology. They are convergent findings from independent institutions using different data sources and analytical approaches. The question of who pays for tariffs is no longer a matter of debate among economists. Americans pay. The remaining questions are political: whether voters and lawmakers consider the costs acceptable given other policy goals, whether the tariff revenue is being used productively, and whether the administration will acknowledge the burden it has placed on the businesses and consumers it claims to be protecting. For anyone tracking their own household budget or business expenses, the research is clear — these costs are not abstract, they are showing up in prices, in reduced hiring, and in the financial strain on the midsize companies that employ nearly a third of the American workforce.
Frequently Asked Questions
Do tariffs ever get paid by foreign countries?
In theory, foreign exporters can absorb tariff costs by lowering their prices. In practice, the Kiel Institute found this happened for only about 4 percent of tariff costs in 2025. The NY Fed’s data showed foreign absorption ranging from 6 to 14 percent depending on the month. The vast majority of tariff costs are paid by American importers and passed through to consumers.
How do tariffs affect prices at the store?
The Federal Reserve Board of Governors published a March 2026 study documenting how tariffs gradually raised retail prices throughout 2025. The effect is not immediate — it takes weeks to months for border costs to work through supply chains to shelf prices — but the Fed traced the increases directly to tariff implementation timelines.
Are tariffs at least bringing in significant government revenue?
Yes. U.S. customs revenue surged by roughly $200 billion in 2025 according to the Kiel Institute. However, this revenue comes entirely from American importers, not foreign governments. It functions as an indirect consumption tax on American businesses and households.
What is the net cost of tariffs after accounting for tax cuts?
The Tax Foundation estimated the tariff burden reaches $1,300 per household in 2026, while the accompanying tax cuts provide approximately $1,000 in benefit per household. The tariff costs exceed the tax savings by roughly $300 per household.
Which American businesses are hit hardest by tariffs?
JPMorgan Chase Institute found that midsize firms — those with $10 million to $1 billion in revenue or 50 to 499 workers — are disproportionately exposed. Twenty-one percent of their imports come from China, now subject to a 55 percent tariff. Their tariff payments roughly tripled in 2025.
Did the tariffs on Brazil and India work as intended?
The Kiel Institute’s case study found that when tariffs on Brazil and India were raised to 50 percent in August 2025, those countries did not lower their prices. Export volumes to the U.S. dropped up to 24 percent, but unit prices remained unchanged. American buyers absorbed the full tariff cost.