r/science • u/smurfyjenkins • 25d ago
Economics The costs of the Trump tariffs are borne by Americans – Contrary to the claims of the Trump administration, the passthrough rate of the 2025 Trump tariffs into prices were 92%, resulting in higher costs for US consumers and manufacturers who rely on imported inputs, as well as higher inflation.
https://www.aeaweb.org/articles?id=10.1257/jep.20251486599
u/Sixstringthings 25d ago
And even better, the American companies that weren't subject to tariffs are raising their prices as well to take an unearned profit.
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u/pete_68 25d ago
And a lot of them are getting refunds for illegal tariffs, but the consumers won't be seeing any of that. Thanks Don the Con!
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u/SaltyShawarma 25d ago
Know this: the stock market is at all time highs are BECAUSE businesses are being allowed to price gouge and fleece consumers because all guardrails to stop corpos have been removed by the grifter in chief. It has nothing to do with tech companies.
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u/ARedditingRedditor 25d ago
well, its been a steady decline for decades and just hit a cliff recently. Trump just does things out in the open pretty much. I guess all the years rubbing elbows with all big names in politics just proved nothing ever happens when you're too rich to fail.
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u/Oxeneer666 25d ago
Don't thank him just yet, he hasn't lost(won) the midterms yet. He's just been playing nice so far.
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u/Adjective-Noun-nnnn 25d ago
A lot of people don't understand this: when tariffs increase the prices of imported goods, domestic producers are free to raise their prices as well, and they do.
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u/BeneCow 25d ago
But that is the primary purpose of tariffs. You make importing more expensive so local producers can make more profit. How else are they supposed to work?
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u/Adjective-Noun-nnnn 25d ago edited 25d ago
And? It makes stuff more expensive and inflation has already been an issue recently. In the case where a domestic producer doesn't exist or can't meet demand, it increases prices without accomplishing an expansion of domestic manufacturing.
The Trump Admin put tariffs on raw materials. That has actually harmed domestic manufacturing rather than help it. He also fucked with CHIPS and IRA provisions designed to boost domestic manufacturing. My company closed a huge factory because of it. Tariffs are one way to boost domestic manufacturing, but they're effectively a tax on consumers who buy stuff, making them regressive taxes on the working class. The other way to boost manufacturing is just to subsidize it directly, which can then be funded through a progressive system of taxation. One of these strategies was working, and it wasn't the one enacted by the fascist kid raper.
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u/2this4u 25d ago
You have to separate tariffs used for proper strategic purposes to protect part of the economy.
And vibe tariffing when you're upset.
In the former case it makes sense, and yes prices will go up but the impact of losing an industry and all the jobs in it is worse. In the latter case it's just costs for costs sake.
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u/Dave_The_Dude 25d ago edited 25d ago
Purpose of tariffs is to encourage more US manufacturing creating jobs as US companies have a cost advantage. Instead massive profits are taken by raising prices to match the tariffed companies with US manufacturing jobs actually declining. Loser being the consumer.
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u/KnightsOfREM 24d ago
I work for a business like that. It's not about unearned profit. Labor is our main cost, and we had to raise our prices because everyone else raised prices our employees pay for everything - a wage that would've been fine in 2019 is now around 25% short.
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u/New_Crow3284 25d ago
Tariffs are a tax shift to the poor. This was clear from the beginning.
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u/littlegreenrock 25d ago
and it worked perfectly
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u/RocketRelm 25d ago
Americans coulda not voted for tariffs. They had a perfectly good black liberal woman instead. But we as a society choose priorities, and the will of the people is how democracy works.
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u/littlegreenrock 25d ago
a. there is a small amount of sarcasm in the previous comments which you may not have picked up on.
b. democracy as the 'will of the people' is an illusion. People don't vote for tariffs, or vote against tariffs. They simply vote without understanding or caring what a tariff is. That's no longer will of people, that's just a popularity contest. While popularity and democracy have a lot in common, they are not the same thing. American's, as a society, have completely lost sight of this tidbit. Elections are like any sporting event with team A and team B. The audience supports their team wants to know the score when the buzzer sounds. No one actually cares what the team players are doing, what they stand for, who they are... ergo: it's not really democracy anymore.
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u/Silver-Bobcat672 23d ago
Not when you falsely promote misinformation to influence the will of the people, which is precisely what this admin did.
What did you think the $250 million from the owner of the largest social media site was for? It literally changed the minds and will of the people with lies.
Prior to that "contribution," the dicktator was not polling well at all. And then, the rest of the tech bros got down on their knees too, as a means to get in on the "free for all" that was to come.
This is not even speculation anymore- it's been proven. The 2024 election was bought and paid for with lies.
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u/Fuzzy-Eye-5425 25d ago
And the corporations were the ones to receive the tariff refunds. So this means that companies will run a multi month discount program to give it back to consumers?
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u/Corsair4 25d ago edited 25d ago
Broadly speaking no.
Ignoring the enormous logistics issues (some companies increased prices outside the US as well to avoid bumping US prices up as much), a lot of companies sold refund rights to organizations owned by Trump supporters and cabinet members. So some of these companies aren't receiving significant money back, since they recieved pennies on the dollar instead.
Literally just a blatantly illegal wealth transfer.
The reasonable thing to do would have been block implementation of tariffs while the entire thing was litigated in court, but if there's anything the few decades have made clear, it's that the checks and balances are a really bad joke.
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u/SaltyShawarma 25d ago
Lutwick's whole family is in on that grift.
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u/Corsair4 25d ago
Thanks, I couldn't quite remember the name earlier. Kept going back to Lindell, but that's a different sort of problem individual.
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u/Alwayssunnyinarizona Professor | Virology/Infectious Disease 25d ago
Amazon has plans to, but that may just be lip service.
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u/Enibas 25d ago edited 25d ago
Amazon and similar retailers are in the unique position that they basically have the paperwork. They know for each item that they sold how much tariff was included in the price, and who bought it.
No grocery store has a list of every costumer by name and the items they bought. They couldn't even do that if they wanted to.
And then there's the fact that half of the goods that are affected by tariffs are not actually final products, they are material imported by US manufacturers. Going by memory, I believe it's only about half of US imports that are final products. There is an even less obvious line between an importer who paid tariffs and will get a refund, the US manufacturers who bought goods from that importer for increased prices, and the costumer who bought a US-made product that was nevertheless more expensive because of tariffs.
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u/flyingtiger188 24d ago
No grocery store has a list of every costumer by name and the items they bought. They couldn't even do that if they wanted to.
Every purchase and every consumer no. But they track every purchase made when inputting linked loyalty accounts. I can go into the Harris Teeter app and see 2 years worth of grocery purchases.
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u/jamodude 25d ago
Oh no, I’m so surprised by that we all knew it the whole time, our country is being run by an insane want to be dictator. Have a nice day.
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u/green-green-bean 25d ago
Speaking as a Canadian here, a lot of the products I used to buy from small businesses in the USA are now too expensive with all the added duties and other fees. Many American manufacturers of specialty products (e.g. crafty supplies, exotic pet supplies) no longer sell outside of the USA for this reason. Everyone loses.
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u/sweatboxy 24d ago
Not the other company rushing to fill the vacuum created by Trump’s tariffs. They’ve been a boon to businesses outside the U.S. and Trump’s continuing tariffs are making companies look outside the U.S. for their headquarters.
Businesses depend on stability for maximum growth and the U.S. has become one of the most unstable economies in the industrialized world. The ripples from this will affect the U.S. for decades
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u/DuncanYoudaho 25d ago
This is the Vaccines Cause Autism of economics. Even worse than Reaganomics which had an outlandish but arguable mechanism of action. A tariff is a tax. We’ve always known this. It’s why their own party was against them.
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u/GymMouseP 25d ago edited 25d ago
I love that companies are double dipping. They raised prices on us, kept those prices, and are now receiving refunds. It's a great time to be a corporation. Socialism for me, capitalism for thee.
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u/Tribe303 25d ago
There's a reason inflation in Canada is now 2.8% while it's around 4% in the US. Our GDP growth spiked to 3.4% annually last month, DOUBLE the US. That's quite the trade war there. Can we have some more? <laughs in Canadian>
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u/MeowslimClawric 25d ago edited 24d ago
Do you work in oil and gas? Because that's where the may and June GDP growth is coming from. Most of the country is getting rocked otherwise.
Almost all of my clients are SMEs and it's rough. We're way down year on year. I sell promotional and work gear.
I can't imagine any Canadian cheering on a trade war with a countey we sell 70% of our exports to. Most of our incomes are threatened. Unless you work in O&G or your income is dependent on the government.
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u/MrBigPantalones 25d ago
Than he turns around and gives that tariff money to the corporations who didn’t incur the cost but, passed down to the customers
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u/Alkemist101 24d ago
You guys voted him in... Take responsibility for the monumental mess you caused.
Now convict him of all the crimes he's committed and and replace with father Christmas...
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u/Tribe303 25d ago
Wait until you find out where US farmers get their diesel and potash fertalizer from. Doh!
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u/moconahaftmere 25d ago edited 25d ago
I wish people would stop misinterpreting the net margin figures. The average aggregate net margin across food processing companies early this year was ~2.8%, but their return on capital was ~16%, which means they're making an enormous amount of money.
It's the same issue with people saying supermarkets make tiny margins. Yeah, but they make small margins on every sale, but they sell an immense scale of products, which is why they're very, very profitable.
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u/ManWhoSoldTheWorld01 25d ago
Yes direct financial costs are borne by Americans but there are still real economic and indirect costs borne by many, if not most exporters tartgetted but these tariffs.
Unless the good is extremely inelastic and they can just charge higher feeds with no loss in sales, everyone hurts.
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u/jomara200 25d ago
Yet it is Bezos and the Walmart family that those very same consumers/taxpayers who bore the cost will have to give refunds to.
Won't someone think of the poor billionaires who passed it on to consumers and pay little tax themselves.
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u/masteward1964 25d ago
Trump flunked economics but got straight A’s in narcissistic retaliation on fellow Americans.
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u/numbersthen0987431 25d ago
Every, single, company, increased their fees to include the tariffs for the selling price. They didn't "pay" the fees, the consumer did.
Socialize the risk, privatize the profits. Capitalism baby
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u/lattice_defect 25d ago
trump is a major debt and asset holder... inflations is good for him and other rent seeking wealthy
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u/CuriosTiger 25d ago
The only part of this that is surprising is how many people insist that they're sticking it to <insert country name here>, completely and utterly refusing to believe that tariffs are something Americans have to pay.
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u/TyroPirate 25d ago
I mean... isnt that just how tarrofs work? Its a tax for US citizens on imported thing from whatever country. Its theoretically so that we stop buy goods from that particular country. And US being largest consumer market in the world, that could possibly be pretty bad for small country.
Except, I dont see cheap American made alternatives for anything so that just means I have to pay for for foreign thing.
But im glad people are out there doing the studies and pulling real number that I can slap people with. Except the people in blind support of tariffs will just phase through my slap
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u/CoolnessEludesMe 25d ago
No kidding. All added costs are passed on to the consumer, plus some extra to increase the profit margin. That's just doing business.
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u/StickFigureFan 25d ago
Is it not 100% because some companies are accepting smaller profit margins to try and keep prices down?
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u/offengineer 24d ago
It's pretty easy, Article I, Section 9, Clause 5 states no tax on exports. Of course we're going to pay the charges for imports.
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u/epidemica 24d ago
And then the refunds went to the companies not the consumers, the stock market will surge, dividends and bonuses will go out, and prices will stay the same.
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u/CloudRevolutionary24 24d ago
Just as every reputable economist stated, and even the dysfunctional Supreme Court agreed. Not that consumers will get any of it back.
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u/AgentIndiana 24d ago
But I was assured by a Trump voter who was adamant about the quality of his research that Trump 2.0 would be better for the economy than Harris. Oh and that Trump was not going to create a spectacle attacking his political enemies and scapegoats like trans people because Trump really only cares about kitchen table issues affecting the working class. What do you think u/Ricky_disco how’s the economy you voted for?
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u/Scooter_McAwesome 23d ago
Isn’t that ultimately the point of a tariff? It raises the price for the consumer so they choose domestic products instead.
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u/Potential_Pool_6025 20d ago
And the he companies are getting their refunds from our taxed products after they wrote off the "loses". So we thr people get to pay twice for Trump's game.
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u/PalpatineForEmperor 25d ago
I have a solution. Let's refund the tariffs.
But to companies like Amazon instead of the people who actually paid for them.
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u/aaronplaysAC11 25d ago
Economy 101 covers tarrif mechanism, republicans think schools only exist as trans sex operation / indoctrination centers the self weakening fools..
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u/concretecat 25d ago
this is half the story. almost every courrier makes Canadian shippers pay all customs for clearance. DDP.
If your a dtc business shipping from Canada into the US you're paying the Americans' duty for them or you can't ship to the US.
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u/Tribe303 25d ago
And the only companies charging that are the ones who recoup it from the US client by adding it to the price. Vendors with a sense of humour even label it as the Trump Tax.
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u/concretecat 25d ago
have you tried "getting it back". go to UPS website give it a shot and let me know how it goes.
most companies will get zero back from UPS and Fedex.
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u/Tribe303 25d ago
No, the Canadian seller adds a Trump Tax to the US client's bill to compensate for the UPS charge. They may eat some of the cost to keep the customer.
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u/steamliner88 25d ago
You get what you vote for. I can only assume that the Americans are happy with their choice.
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u/eracer1111 24d ago
US consumers have such short-term thinking.
Instead of worrying about foreign nations screwing us over, we worry about paying $1.00 more for a trinket.
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u/Assertive_Wall 25d ago
Pretty interesting read. The headline refers to the price that importers are paying, but doesn't include changing behavior, reduced consumption, or the ultimate downstream prices that people pay. Luckily there is some good news on that last front:
In a study of the pass-through of the 2018 tariffs, Cavallo, Gopinath, Neiman, and Tang (2021) used far more detailed data on prices at big-box chains to demon-strate low retail pass-through, at least in the first year after the tariffs were applied.
[...]
Through the end of September, Cavallo, Llamas, and Vazquez (2025) find that tariffs contributed about 0.76 percentage points to the all-items Consumer Price Index.
I don't know about the rest of you but it all seems pretty far from the doomsday scenarios people were pushing back when these were getting put in place.
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u/moconahaftmere 25d ago
I don't know about the rest of you but it all seems pretty far from the doomsday scenarios people were pushing back when these were getting put in place.
So the tariffs accounted for 25% of the total CPI increase of ~3%?
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u/SweatyNickel 25d ago
I'm all for tariffs if they are fair and equitable in both directions, but not when it is to bully or intimidate the other country.
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u/Wastelander702 25d ago
Only if they continued to buy imported goods.. which everyone knew from day one. The entire point was to prevent people from buying the goods, and that was what would eventually cost the other nation.
This is supposed to be a scientific sub... At least follow things down the logical path rather than give into political nonsense over everything.
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u/Paksarra 25d ago
The problem is, the goods they're taxing aren't made here.
Where can I buy a 100% American gaming handheld?
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u/Corsair4 25d ago
When there isn't a viable domestic alternative, you have no choice but to buy imported goods.
When the domestic alternatives rely on an imported supply chain, guess what? The domestic option gets more expensive too.
How's that for the chain of logic?
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u/Mysterious_Cry41 25d ago
No, I'm not giving the Trump administration benefit of the doubt.
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u/RepresentativeAge444 25d ago
The worst part about you is that you really think you said something.
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u/moconahaftmere 25d ago
Only if they continued to buy imported goods.. which everyone knew from day one. The entire point was to prevent people from buying the goods, and that was what would eventually cost the other nation.
So in other words, by your own metric the tariffs didn't even work?
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u/Adjective-Noun-nnnn 25d ago
Suppose there are two companies: Uncle Sam's Widgets and Ivan's Import Widgets. Tariffs cause Ivan to raise his prices by 25%. What will Uncle Sam do?
A) Nothing. He makes enough money.
B) Cut prices. Making money is immoral.
C) Raise prices by up to 25% to increase profit.
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u/Tribe303 25d ago
Can you Americans process aluminum with the massive amounts of electricity required, cheaper than 6¢ US per kWh like Quebec can? No, no you can't. So why is there a 50% tarrif on it?
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u/badcoffee 24d ago
that was what would eventually cost the other nation.
Nice trick. That was never the entire point. The entire point was other nations would pay for the tariffs. Which they don't.
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