Americans, not foreigners, are bearing nearly the full cost of U.S. tariffs, according to new research that challenges a central claim by President Trump and could complicate his leverage in trade disputes, including his push on Greenland.
Trump has repeatedly asserted that foreign producers would pay the price for his aggressive tariff increases, a position intended to reinforce his bargaining power and encourage other nations to negotiate with the United States. His claims have been bolstered by relatively strong U.S. economic growth and moderate inflation last year, even as growth slowed in Europe and other advanced economies.
New research published Monday by the Kiel Institute for the World Economy, a respected German think tank, suggests that the tariffs’ impact is largely being passed to American consumers and importers, rather than foreign exporters. By analyzing $4 trillion in shipments between January 2024 and November 2025, the study found that foreign producers absorbed just 4% of the cost of last year’s tariff increases by lowering their prices. The remaining 96% of the burden fell on Americans.
The research also highlighted how the tariffs affected trade flows. Indian exporters, for example, largely maintained their prices in the face of U.S. tariffs but reduced shipment volumes to the United States by 18% to 24% relative to other major markets, including the European Union, Canada, and Australia. In effect, the tariffs acted as a consumption tax on American buyers rather than a tax on foreign producers.
Donald Trump has imposed a national sales tax on the American people. pic.twitter.com/UEJTfxbucZ
— Gavin Newsom (@GavinNewsom) January 23, 2026
“There is no such thing as foreigners transferring wealth to the U.S. in the form of tariffs,” said Julian Hinz, an economics professor at Germany’s Bielefeld University and co-author of the study. He noted that the $200 billion in additional U.S. tariff revenue last year was “paid almost exclusively by Americans,” a factor likely to contribute to higher inflation over time.
Despite these findings, U.S. inflation remained moderate even after Trump implemented the most aggressive tariff increases seen in decades. Harvard Business School research indicates that only about 20% of the tariffs had filtered into consumer prices six months after their introduction, with U.S. importers and retailers absorbing the remainder.
The economic effects of Trump’s trade policies are gaining renewed attention as the president uses the threat of tariffs on Europe to support his Greenland initiative. According to a report from Capital Economics published Monday, such tariffs could reduce eurozone output by 0.2% to 0.5% if implemented.
The Kiel Institute researchers suggest several reasons why foreign producers have not cut prices to maintain sales in the U.S. market. Exporters may have redirected goods to other countries, expected tariff levels to change, or determined that steep tariffs—some exceeding 50%—made selling at lower prices unprofitable. Additionally, longstanding supplier relationships may limit the ability of U.S. importers to source alternatives quickly.
Hinz added that the distribution of tariff costs could shift over time. As American companies adjust and identify new suppliers, overseas exporters may eventually absorb a larger share of the tariff burden.
