American importers and consumers bear the cost of 2025 tariffs: analysis
kielinstitut.de
kielinstitut.de
People, lots of people, lots of people who have a really deep understanding of national and global economics (unlike me), have been warning about this since talk of tariffs became common currency a year ago.
I wouldn't like to comment on HN's political leanings in the round and, obviously, there are a large portion of non-US readers/commenters on the site (including me), but will say this: there are a portion of you who voted for this. Exactly this.
What were you thinking? What was going through your heads? I'm genuinely curious.
EDIT: Wow... well, having asked the question, it looks like I now have a lot of answers and perspectives to read. Thank you all for taking the time to comment.
You're assuming that modern politics across most of the World has something to do with rational, logical thought. Russia, China, Europe, the US, the Middle East - they are all in a quagmire of irrational fractures between the public and the political classes who want power/control for benefit of themselves rather than for the benefit of that public.
It's not unique to the US, it's just that they look like they are speed running it from outside.
Facts change nothing. This report means nothing. These people still believe. The report is wrong. They are right.
The truth is whatever they want it to be, not something out of their control.
It's sad but true. Deep down, political thinking is influenced by tribal thinking, a rigid us versus them mentality.
This is, after all, how the "divide and conquer" method gets to be so effective. A house divided amongst itself and all that.
Most people I speak to in Canada, Europe and Central America seem perplexed why Americans they know do not seem more alarmed.
"Feelings don't care about your facts." — not Ben Shapiro
Not that it’s necessarily as bad everywhere, but time and time again I talk to people from various countries who say the current leader never could have been elected back when they were living there.
A lot of this, as in the case of Trump, seems like legitimate dissatisfaction that voters have which is funneled into finding alternatives to the people that are currently representing them, without deep thought about the outcomes of the policies the replacement is pushing for. In the case of Trump voters in particular people seem to very frequently be willing to overlook statements they would otherwise disagree with just because there are other statements that align with their thinking, or that seem like “change” that they are willing to support to see where it leads.
If people stopped spending hours each day scrolling through Instagram, TikTok, and Facebook feeds, media incentives would change. Journalism would become more thorough and responsible, rather than optimized for outrage and clicks. People’s attention spans would recover, making them more capable of listening to opposing views and engaging in meaningful discussion. The overall quality of public debate would improve, and political leaders would be chosen based on objective, long-term policies rather than emotional manipulation.
The reinforcement-learning algorithms that drive these feeds are fundamentally unnatural. They represent a massive, uncontrolled social experiment on humanity—one that is far too powerful for our psychological reward systems to handle.
What needs to happen is education. Education on how the attention economy works. People must learn to resist becoming social media junkies, because every hour surrendered to these platforms reinforces the very systems that distort public discourse. When we lose control over our attention, we don’t just harm ourselves—we actively worsen the societal conditions that enable manipulation, polarization, and poor political leadership.
No, it is surprising, as noted in the article, because basic economics suggests that suppliers will adjust pricing, and eat some of the tariff to keep their products competitive. Page 5:
This finding was initially surprising to some observers. Standard economic models suggest that the incidence of a tariff depends on the relative elasticities of supply and demand. If foreign exporters face highly elastic demand (meaning buyers can easily switch to alternatives), they might be expected to absorb part of the tariff to remain competitive.
Exactly: tariffs are taxes in another guise. They only serve to create an (artificial) price advantage of local over imported goods for as long as they're levied.
> What were you thinking? What was going through your heads? I'm genuinely curious.
I also can't fathom why the crowd (not just a HN subset) that was clamoring for tariffs thought it'd be anyone other than them shouldering the increase. Perhaps their influencers didn't spell it out for them?
Now everyone gets to pay more - and not just in the US.
The real distinction is that tariffs are conditional. Currently, firms can avoid them by changing sourcing. That makes them more behavior-shaping than revenue maximizing.
Given that the U.S. never reversed the TCJA corporate cuts from 2020-2024, tariffs are one of the few active levers currently increasing the marginal cost of offshore supply chains.
Why would you (or anyone) be surprised that economically sound policies are not popular? They are not popular in the US. They are not popular in Europe. They’re not even popular on HN.
For reasons I don’t understand, almost everyone hates economics.
But social media changes the equation entirely. It gives us the speed of direct democracy without any of the structure or responsibility. It pushes people to judge candidates issue-by-issue, often on topics they don’t understand well, while eroding the deliberative layers a republic is supposed to have.
The problem isn’t people or education — America didn’t get this far because Americans are any smarter or dumber than anyone else. It’s the design of the systems. The founding fathers built a system that has so far lasted almost 250 years.
You cannot expect people to change — safety protocols, procedures, govenments — it’s about the systems.
And, if you read the paper, you will find that evidence. How these work depends on initial conditions that vary and exporters will not react in a consistent way.
As a specific example, theoretical research in this area tends to make assumptions around the stationarity of margins that are obviously ludicrous in the context of reality in the US. It is quite easy to justify almost any policy with theoretical research in economics so people who have no understanding of economics will find evidence for whatever position they choose. Reality is quite different.
Yes it will hurt, they argued, but the long term effect will be a stronger and more independent domestic economy. And the pain is worth it for that end. There's plenty of evidence that what actually results are inferior products from domestic companies insulated from international competition, but that was the pitch.
There's also a large group in the base that voted for this who already had an ideological "buy local even if it costs more" philosophy, so to them the proposal was just to force everyone else to join their cause.
So roughly 98% of the population was surprised?
The same thing as usual: people don't like how things are going, they demand change, but they're not specific, so the result is extreme, and then people demand change again, and on it goes. There's no great insight or rationale going on. People are just dumb animals in hats.
The headline suggests it was all passed into consumers. So why is inflation still so low? If you add 10-30% to prices (granted, of imports, not of houses, domestic food etc), you'd expect more.
If companies were eating it (which apparently they aren't) then their profitability should be down. But that doesn't seem to be the case either.
So..??? It's like that riddle with the three guys buying a pizza. Where did the money go?
Economics tell people the clear impact, but it doesn't make the news. We get fed with whatever the political influencers decide to tell us. Did the brits expect the consequence of brexit? No but that's because they deemed whatever the news said to be unreliable on this topic. Which for once happened to be true.
I like the idea of reaching across the aisle. However the divide is no longer the gap of a few feet. It’s a different world, with different rules.
I just checked yougov, and Trump has an 88% approval rating amongst Republicans.
https://today.yougov.com/topics/politics/trackers/donald-tru...
Do check, since one hopes I erred in reading the chart.
The victory of Trump is mostly the same process that gave the UK Brexit.
Just people acting based on the information they are being provided. If the other side is filled with feckless buffoons, and every source of news you have is telling you the same thing, then what else will someone do?
Similar to an extremely modest increase in local consumption taxes or income tax.
If you were going to do that though, it would be more like a 10-20% blanket tariff on all goods. No exceptions, no special deals, and you can't use tariffs as a negotiating tool. So that's not what's going on and the current approach doesn't make any sense economically
The point when Trump was elected was to make americans buy american and to get international companies to move their production to the U.S.
In Sweden they did something similar when they thought people were buying too much cheap stuff directly from China instead of from the middlemen paying taxes. The solution was to add a tariff on cheap goods from China specifically.
I don't enough to know if it works, but it's not a new strategy. In Trumps current politics though it's used more as a bargaining tool and not something that's supposed to stimulate the economy, is anyone even claiming it is the goal?
Trump and his entire administration admitted there would be short term pain, possibly a recession, but that it would be "worth it" to restructure the economy.
So the question is: how long does the pain last? And is the economy stronger when it's over (do we get over it)? It's been 9 months so far.
From my perspective the policy goals are very unclear since it seems like they're actively wielding tariffs both as a means to reorganize the economy and as a weapon to bully other countries. Mainly bullying. The intended effectiveness on our economy seems difficult to judge.
I don't think it's a simple answer. A couple things that likely contributed (I'm not an expert, just my opinion): there is an EXTRAORDINARY amount of propaganda being spread, whether people realize it or not, on and off the internet that gets consumed nearly 24/7. This happens on both sides of course, but think about some of the events leading up to the election. Musk bought twitter and quite literally turned it into a multi-billion dollar propaganda machine.
The general "drain the swamp attitude" that the administration parroted during the election (and first term) represented a change from how "traditional" politicians/government do things. People value that even if they don't understand/think about how it would affect them personally. This ultimately lead to demonizing the federal work force and mass random firings (in many cases having nothing to do with merit).
Trump also represented a push towards traditional values and national identity, which for some people was more important than whatever economic plan Trump had to improve things in the country. Other than tariffs, did he even have a plan? I don't know. But many people didn't/don't seem to care.
See also Brexit.
10 years ago
Tariffs make foreign imports more expensive. This dissuades people from buying them. Some of those people will instead buy equivalent American made products, now that the price difference has lessened. I consider that a good thing. There will be pain while local manufacturing ramps up (or forever, if it never does) for products that have no domestic equivalent. That sucks, but sometimes things need to suck before they improve. Paying off the national debt, for example, is something I support, even if we have to slash a lot of useful spending for awhile. I think most rational Republicans are voting for these sorts of things despite knowing they will make things temporarily worse, in the hopes of an eventual better. The left tends to never do this, for they are very attuned to the immediate suffering their plans cause. The right tends to be less sensitive to the short term suffering their plans cause; the right thinks that the alternative, a slow decline, is worth the pain to avoid. Trump has bungled the implementation of the tariffs, but I still support their use in general.
Fundamentally it makes no sense to me to support a minimum wage for your countrymen, but also support them importing massive amounts of slave made goods. You are creating rules on the supply side that the demand side does not have to follow, which only harms your own domestic businesses. Your own country's businesses have to compete against slave labor while paying living wages; for most manufacturing this is just not possible. You are incentivizing off shoring, which harms your working class, who have to compete with subminimum wage workers. Workers rights must be paired with tariffs, or every additional worker right is a demerit on his hireability against foreign workers without those rights! If you want your country to produce anything, and to have a strong working class, you either remove minimum wage, or you implement tariffs. We cannot simultaneously support strong domestic workers rights and mass importation of sweatshop goods that were made without them. It hollows out the country.
Edit: I am rate limited though I would like to reply to some of my interlocutors. I will reply later.
And in terms of burden - the cost hits the poor the most - but if your a billionaire funder of US political parties that's the point.
For a non-US person the most worrying aspect of this is that it also helps make the US more self-sufficient which means it's better prepared to go to war - which is not really good news.
See Brexit. As Michael Gove said, the people have had enough of experts; for a certain sort of person, not understanding things is a badge of pride, and they're more liable to trust people like Trump, who transparently do _not_ understand things, than _experts_.
Although as the comparison hopefully makes clear, you worrying about tariffs is missing the point, it's more a question of basic democracy at this point. I'm also somewhat concerned about your (edit: as in the USs) new found lust for Lebensraum, because again, that went well last time.
Second, reducing consumer prices was not the goal of the tariffs. The primary goals were to encourage companies to move manufacturing to the US and to be used as leverage in negotiating other matters with foreign leaders.
This authoritarian model has proven very successful for anyone Putin and his aparatus has installed anywhere. Now it may be franchised even further.
I know two people who voted for him.
Person one has voted Democrat her whole life. Has worked for the Democratic Party. Has a son who was a Democratic elected official. But she lives in Texas, and watches too much local news, and believed that murderous immigrants were pouring over the border, guns blazing, taking out innocent American citizens daily at the beach and grocery store. So she voted for him because she believed only he could stop this from happening.
Person two is a wealthy white boomer. His business already runs in America. He actually has an advanced degree in economics. He believed that the tariffs would only be used surgically by smart people to protect American business. He is not personally affected by any of the racist policies or any of the other shenanigans. So he voted for him because he liked the protectionist and tax cut policies.
He regrets his vote. I haven't spoken to her in months because she stopped talking to me when I kept show her that her "facts" were made up.
Many people were thinking Joe Biden was looking old... Until 2 months before the election when a faceless political elite replaced him with a candidate who had repeatedly lied about Joe Biden looking old. The American public might be stupid, but they don't like being treated as though they are stupid - which is exactly what the DNC did.
Horseshoe theory and all that, populists gonna populist.
He only started that tariff stuff when he took office.
Edit: Clearly I was not following things well enough, sorry for the wrong information.
If I recall correctly, we vote for presidents, senators and the congress who have policy stances on a variety of issues. There are usually only two options, one of which stands for open borders, not enforcing laws, socialism and demonizing people who choose the other option on the ballot.
A large cohort of independents didn't vote for republicans, they voted AGAINST democrats.
Once again proving that economists are engaged in mere astrology.
You also frame the argument that the last administration was tariff opposed, after they issued a 10% blanket tariff on the US' largest trading partner and tariffed Canadian wood products, directly causing house prices to skyrocket during the pandemic. You will never consider those impacts, because you're engaged in a fundamentally political argument, not an economic one.
The US has 4% GDP growth and a 2.7% inflation run rate. Wage growth is exceeding inflation again. Data doesn't lie, but economists do. Routinely.
[1] https://www.msn.com/en-my/news/other/economist-warns-of-moth...
[2] https://www.cnn.com/2024/11/13/economy/inflation-trump-econo...
[3] https://www.cnbc.com/2024/06/25/nobel-prize-economists-warn-...
I’m adamantly against all forms of illegal immigration. There are plenty of people around the world that want to come here and are willing to wait in line. I’m perfectly fine with the intentions and methods of the current administration.
I’m in favor of doing whatever we can to increase our manufacturing base for the future. I’m perfectly fine with paying more for imported goods that I don’t actually buy anyway. Paying 95% for crap from China that I have no intention of purchasing does not impact me.
I hate all taxes and do not consider it charitable to spend other people’s money. Taxes are a necessity as we need to fund government functions. But it is those functions that should be limited. Because government is generally terrible at most of them.
Also, it's deeply naïve to assume tariffed countries would absorb the cost. Why would they? It's like going into a shop and asking for a discount because you just took out a loan. Why would the shop give you a discount for something you inflicted on yourself? And what makes you think other customers wouldn't ask for the same discount?
EU + South America start trading more while America shuts itself out.
The US might have an easy to choice to make after Trump. Regardless of who takes over. Simply roll back tariffs and instantly boost the economy. The protection aspect of tariffs will probably have proven to be mostly counter productive by then.
At least I don't see the US car industry doing any better when it can't export. Coal probably won't ever recover from being obsolete, etc. I think this mostly won't be controversial a few years down the line.
Prices for the same product are about 37.5% higher in the US. It's nuts and the reverse of how it used to be not long ago.
I paid EUR 510, which means $593. This is with all taxes included, so the price without tax would be about $490.
I have searched now the ASUS mini-PC on Newegg, and its cost is $679, around +38.5% more expensive.
This is wild, because indeed, until recently the price of electronics devices was significantly lower in USA in comparison with Europe, while now it is the reverse.
This is not a "Made in China" mini-PC, which might have been affected by worse tariffs.
Moreover, I have equipped the mini-PC with 32 GB DDR5 & 1 TB SSD, while cursing the more than triple price of DDR5 compared with last summer, so that now the DRAM has been more than a third of the price of the complete computer.
This configuration has cost me the equivalent of slightly less than $900, without taxes. The same configuration has a price on Newegg of almost $1200.
In a sense I am happy. All empires decline. This will decline USA forever.
Tariffs are a mid-long term strategy to encourage onshoring business, for reasons including military, national security, and political influence on foreign powers.
This is a complicated topic involving the global economy and evolving intercountry landscape. All these slam dunk takes are incomplete to the point of being wrong - and inflammatory.
My point is that your thoughtful response about reliable continuity, both inter- and intra- president, is not present in a lot of the comments.
We never accurately measured effect of pedal on the gas trade with China caused with WTO admission nor even NAFTA, the no on ramp was huge shock that didn’t show up in traditional measures. So trying to go full gas reverse with no real strategy is almost mindless.
Seems safer for many business to just continue to operate outside of the US and get a more consistent business relationship with every other country in the world.
Whatever strategy you pursue I think it’s good to know who is actually paying for it.
She absolutely thinks that tariffs magically make the US economy better in a very short time period. She thinks that the governments of the countries that she hates are paying them and that the tariffs are solving the deficit problem. She thinks that the number of manufacturing jobs in the US has skyrocketed.
People do believe this because that's what they were sold. Whether the line they bought has any connection to objective reality is irrelevant.
No, tariffs can be a tool in a mid-long term strategy. They are not themselves a strategy.
Do you take their arguments at face value? The arguments don't even work because the US clearly had better security, was in a better situation militarily (due to relationships, including with allies), and more influence without the tariffs. If you don't trade with them, they won't be interested in what you have to say.
It does fit an attempt centralize vast power in the current White House, which now controls trade, has shares in several large companies, great influence over many other companies, influence in large media organizations, and claims virtually uninhibited power in many domains.
Then there are the sanewashers who try to act like there is a grand strategy behind taxing uhhh... bathroom vanities... then removing the tax a few months later.
Both are wrong, just different flavors and with different moral and intellectual culpability for being wrong (the latter are worse).
No, that's the literal messaging from the US government. Trump has been talking about tariffs as the magic pill that fixes everything.
If someone decided to come up with a strategy to do something fanciful, like find the pot of gold at the end of a rainbow to solve their debt problems, would it really be worthy enough to be called a strategy?
Unfortunately he's the rich uncle everyone has become dependent on, so the world can't just let him FAFO.
This means that to the subset of HN crowd that don't have alternate sources of political news, this indeed looks like a bombshell.
The article just says it doesn’t show up when shipping containers change hands.
No. It isn’t.
https://www.cnn.com/2024/09/09/politics/fact-check-trump-van...
> “She is a liar. She makes up crap … I am going to put tariffs on other countries coming into our country, and that has nothing to do with taxes to us. That is a tax on another country,” Trump said.
> Vance said in late August that as a result of tariffs Trump imposed during his presidency, “prices went down for American citizens.”
Trump has said many times, including as recently as last month, that tariffs will make so much money we can get rid of the income tax.
This suggests that the man is not thinking coherently on the subject.
They deliberately disinformed the public, there is blatant evidence that the news anchors were aware that they were lying. Not just bending facts a little or opining, but knowingly and purposefully lying.
The pretext of freedom of expression, and more narrowly freedom of press should not *continue* to apply to businesses/individuals which are found liable/guilty of such destructive behavior for the society they operate in.
The same should apply to people like Alex Jones, you had your chance to use freedom and you have wasted it, move on to another profession.
It’s true on its surface - most people don’t know about economics, across all political spectrums, and so rely on leaders (which I thought is what liberalism advocates for?).
It’s not a helpful model if you want to understand what’s going on. So then the interesting parts to explore are the reasons they want to believe it, and the reasons given by the educated economists who also support the position
Econ 101 normally covers tax incidence (which side bears the burden of a tax). It has a lot to do with elasticity of both demand and supply. If foreign exporters can easily shift to other markets or adjust production (elastic supply), they'll pass most of the tariff cost to consumers through higher prices. If American consumers have few substitute products (inelastic demand), they'll end up absorbing most of the cost. Of course if the opposite is true, the sellers end up eating the tariff.
The reality is that tariffs typically get passed through to consumers as higher prices, not absorbed by exporters. The exact split depends on how flexible each side can be, but empirical evidence shows consumers usually bear most of the burden.
What do you mean by "pass the cost"? Exporters do not pay tariffs, importers do. The exporter doesn't give a shit because it doesn't affect them at all.
This is one of the most fundamental misunderstandings of how tariffs work in the first place. The entity that's picking up the cargo at the port is who literally has to pay CBP for them to release the goods. The middleman (say, Walmart) may pass the cost to customers or whatever, but tariffs are entirely inconsequential and irrelevant to foreign exporters. There's no way to send a bill to a foreign entity demanding a tax for some goods that have arrived at a port, after all.
One big problem with arguing about this is that it will take many years for the effects of the tariffs to settle. If there’s new opportunity for local competition of goods that we’ve been importing, new companies can’t form and meet that demand over night, it will take longer than the president has to see that succeed, which certainly hasn’t stopped him from claiming it already has.
Tariffs rates by this administration are capricious and punitive, not targeted and strategic.
The only fruit of this is real economic pain for the American consumer. But that was likely the goal, so mission accomplished I guess.
Countries geographically closer to the USA might reason differently because close countries usually trade more and they have more to lose. But even in this case, if a Mexican or Canadian company can find other markets or discovers that it can keep selling at the same price, they will not bear any of the burden of the tariffs.
Russian like sanctions were applied to Italy about 100 years ago because of colonial wars in Africa. Despite the sanctions lasted only 6 months, Italy discovered that they ended up trading less with the usual partners and more with others. Tariffs are somewhat similar to sanctions as they apply friction to trading.
Isn't the only thing that could matter - apart from strategic considerations of financing a loss for a time - if the margins are big enough? Who wants to pay for people to take their products below the full cost of making them, apart from some investor-financed hype startups?
I wonder what supply and demand curves look like if you keep telling people that the increased costs will be paid by foreigners and not them?
I assume it has an impact eventually but it must dampen the speed of response if people believe that.
But, integrally the whole package is just wishful thinking.
I mean, maybe it was elastic for imports from Heard and McDonald Islands. Penguins don't care about margins after all.
Such protectionist practices were used by China to bootstrap their own automobile industry, before they became competitive in the global market. Of course, China had surplus capacity of untapped cheap labor, which America does not.
Barring an evolution in automated manufacturing, or an overhaul of regulatory policy, I'm pessimistic it's possible to accomplish the same in the US. But, in principle, tariffs have a valid place in supporting an emerging local industry.
First you subsidize and support the creation of currently not commercially viable chip fabs on-shore. Literally handing companies money under some obligation into the future.
Eventually the on-shore chips are produced, but they have higher total cost of ownership for the users: Logistics may be cheaper due to less distance, or more expensive because they are not well-trodden paths yet. Production costs like labor, water, energy could be higher. And the chips could just have higher failure rate, because problems in the new processes need to be kinked out.
But to get local consumers to switch to these switches, one applies tariffs to other sources of chips so the on-shore chips become more competitive artificially, until they become actually cheaper and competitive.
The way it is threatened here isn't in the use case of tariffs at all from my limited understanding.
Even as a kid I was confused. Where else is the money going to come from?
There are circumstances where much of the burden of increased production costs is borne by the producer. When demand is very elastic (consumers are price sensitive, or there are many good substitutes), and supply is inelastic (its hard to change the level of output), the suppliers will eat the cost.
Out of that price: $3 goes to production cost, $3 goes to tariffs, and $4 goes to profits.
Now the taxes/tariffs are doubled. The producer can up their price to $13, meaning $3 to production, $6 to tariffs and $4 to profit.
But customers might not accept any price higher than $10. They won't buy.
So instead you continue selling for $10 and your costs are: $3 for production, $6 for tariffs and $1 in profit.
That's what people mean when they say that companies are paying the tariffs. They're not profiting as much as before.
In practice it's usually a mix of higher consumer prices, lower company profits, or even some products not being imported anymore.
Which would be a nice balance to the way productivity has rocketed since the late 70s, and has mostly flowed to the top 1%.
Ultimately - and predictably - wealth hoarding becomes economic self-harm. You need distributed prosperity if you want diverse growth and economic and social stability.
> "Foreign exporters absorb only about 4% of the tariff burden-the remaining 96% is passed through to US buyers."
so yeah, the exporter does pay some burden. it's not binary. indeed, tariff exports can be designed in a way to dial either direction. certainly, we could dial foreign exporters burden to 0% – and we could dial it back up to 4% (where we're currently at). but, 4% likely isn't a hard ceiling, either. Of course, the 4% number is an aggregate, not the blanket value across indidual goods (or services).
finally, the effect of tariffs is argued to be wealth transfer to the US Treasury. this is worth thinking harder about. but also, exports may change from whom goods are purchased. thus, it's a diplomatic policy, as well.
Does it change who customers buy food from? No, because everyone increases their prices regardless of if they’re impacted by tariffs or not.
The 2018 washing machine tariffs are a clear cut example of why tariffs are a garbage strategy.
https://www.warrantyweek.com/archive/ww20250522.html#:~:text...
Price Pass-Through: Studies found that 100% of the tariff cost was passed through to consumers, resulting in an estimated $1.5 billion in additional costs to American families in the first year. The "Unexpected" Dryer Rise: Although tariffs only applied to washers, the price of dryers (a complementary good often sold with washers) also rose by an equivalent amount—approximately $92 per unit—as manufacturers increased prices on laundry pairs. Job Creation Cost: While the tariffs helped domestic manufacturers like Whirlpool, LG, and Samsung shift production to the U.S. and create about 1,800 new jobs, researchers estimated that consumers paid over $800,000 annually for each job created. Outcome: The tariffs resulted in a 49% decline in imports from 2017 to 2019. They expired in February 2023, after which washer prices decreased.
It's a national sales tax really.
It's constantly disappointing how the apparent intellectuals who frequent and operate HN will rally to that side out of libertarian convenience and out of annoyance and disgust at "wokism". And then will inevitably be shocked when everything goes sideways again. Hopefully the education will stick longer this time than it did after G.W.Bush.
[1] https://en.wikipedia.org/wiki/Reality-based_community
[2] https://en.wikipedia.org/wiki/Alternative_facts
[3] https://www.npr.org/2020/09/29/917747123/you-literally-cant-...
[4] https://mashable.com/article/alex-jones-defense-performance-...
Doesn't really work when main reason for product existence on market is either "no equivalent" or "this particular subgroup is only imported" (say given specifically tasting cheese).
Suppliers in China are dropping prices to offset the tariff impact - this is what I see in my direct industry and also in many adjacent ones. This is benefitting other countries that don't have Tariffs on Chinese goods since they can buy cheaper as well. I suspect this is a significant factor in the GBP/EUR strengthening in relation to USD. There was a point where there was such a pronounced impact to imported goods that the cost of shipping a container from China to US went from ~$3500 to <$1500 pre/post Tariff.
Large manufacturers (automotive certainly, but also raw materials production and component production) are actually moving facilities to the US, which was one of the intended effects.
US manufacturers are enjoying some price relief as landed costs of chinese-produced goods are increasing. Hard to quantify what this means but the frustrating part is that they are not reducing their prices just enjoying higher margins.
Countries outside the Tariff zone are enjoying more trade - Canada is a very real example of this policy backfiring - they just walked back the Chinese Automotive Tariffs in exchange for relief on agricultural reciprocal tariffs. Mexico is entering into similar agreements with non-US trade partners. Some products are releasing in non-US markets first and at lower costs than they are in the US.
US-sourced chipmaking is accelerating - Intel's new fabs are probably the most prominent example of this (albeit they are slow to pick up volume - I expect this will shift with TSMC rationing production to brands like Apple and Qualcomm).
I think the increase in cost to consumers is painful and that the current Tariff rates are excessive + there is a lot of "cheating" where Chinese suppliers are declaring lower cost of goods on import to reduce the landed cost of Tariffed goods - there doesn't appear to be enough resources to police this policy fully.
All in all an interesting economic experiment and it will certainly take years for any of these realities to have a measurable positive impact domestically.
What countries are those? As far as I know, most important markets have great tariffs on Chinese goods.
So when the US is high teens/low 20's average tariff and the rest of the developed world is 0-5%, that's essentially zero as far as market pressure is concerned.
Chinese imports to the US is down to 8% in October 2025, compared to >13% prior to recent trade policy changes. In the same period, EU imports from China have grown 5%. My point remains that US exerting import pressure on China is benefitting the rest of the world's buying power with China, at it's expense.
What if that was the intended result?
https://www.npr.org/2026/01/14/nx-s1-5638908/walmart-prices-...
Consumers are just buying from other sources (domestically or otherwise) or not buying because it is no longer worth it.
There are a lot of reasons why these tariff's are bad, but economically, it is not a bad thing for people not to buy things they do not need, or to buy them from a domestic producer. Consumer spending actually increased last year, and inflation is low.
I fear that they already decided that issue when they chose not to intervene and now have the excuse of "lol well can't undo it now" ready to go.
Edit: It appears Trump & Co intend to replace SCOTUS if they lose the tariffs ruling ... https://www.nytimes.com/2026/01/19/us/politics/trump-tariffs...
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There does seem to be indications that the actual tariffs collected seems far lower than the actual tariffs promised, likely just half of what was promised:
https://www.nytimes.com/2026/01/03/business/economy/trump-ta...
It is a federally funded research organization (part of the family of Leibniz institutes) similar to a university but without teaching. Here's a list of the others [1].
These are independent, high-quality research institutions without political money or a designated political agenda.
[1] https://www.leibniz-gemeinschaft.de/en/institutes/leibniz-in...
If a think tank from a non-tariffed country would write this piece, they risk getting tariffs tomorrow.
And would Americans trust a (US) think tank in the juristiction of the US government right now?
What source would you trust on this matter? Or rather: who has published something we could look at that contrasts these findings?
[1] https://mediabiasfactcheck.com/kiel-institute-for-the-world-...
Which sources would I trust? I feel it's important to read broadly, and (on a long scale) improve your ability to discount biases. To that end, I'm not recommending anything, but everything in proportion.
Your comment serves nothing but to suggest anew that Americans _should_ be suspicious. Either that was your aim to begin with or you’re okay with that result.
If you add that information, if you really think it adds any value, after discussing what's actually in the study the comment would be sooo much better.
If the importer took on most of the burden that would defeat the purpose of the tariff.
I will contribute $$$.
tgtweak has a good one in here.
As someone in India, this statement is incorrect. There are no consumer receipts in India that show the import duties (which is what tariffs are) as an amount or as a percentage. There are plenty of goods sold in India that are imported, duty paid, and the costs are passed on to the consumers (with no explicit mention of that in the invoice or receipt).
You may be confusing these US tariffs with local taxes in India like GST. In the US, sales tax is shown in the consumer receipts (if or as applicable in the state, county, city, etc.).
In India and in the US, import duties are not shown in consumer receipts, except in the case where an individual is importing something and is liable to pay the duties and levies directly. Indians would probably revolt if they actually knew how much customs duty they’re paying for all the goods they buy individually.
How did the US become this insane this fast - I'm not even against tariffs but you need to decide which industries to use them on e.g. steel, drones, maybe electric vehicles - blanket tariffs by a mad king are really difficult to fathom. When will congress wake up and will it be too late?
It's also extremely hard to pick winners which is why the Chinese just fund everyone and let the winners cannibalise their less successful competitors. I'd be more confident of Chinese semiconductors being ahead over the medium term than US without ASML.
https://fortune.com/2026/01/18/europe-retaliation-8-trillion...
Unfortunately (for sellers) tariff decrease trade volume so even if only 4% absorbed by a seller they have much bigger losses from sell volume decline.
Economy is not a zero sum game - almost everyone looses from tariffs - consumers no longer can afford the same some things they did buy in the past because tariffs increased prices. Sellers cannot decrease prices because in many cases it will make their business unprofitable but they still loose on the volume.
In Europe, prices show the price INCLUDING sales tax (VAT, typically 20%). What you see is what you pay at the register.
In the US, prices show the price BEFORE sales tax (national average circa 7%). You pay 7% more at the register than what you saw.
I wonder if we could update US pricing so that the tariff was collected at the cash register, just like sales tax is, so that people could see that they were the one paying the tax.
yes, I see the obvious practical difficulties with this. It is a though experiment, nothing more.
I thought what they'd do is push for a national sales tax (which would be regressive) with the promise of repealing the income tax, but when it came to the last part they'd just kind of conveniently forget about that and we'd end up with a huge national sales tax on top of existing income tax.
But this works too.
That's a tax increase, using a regressive tax. It would strain belief in their seriousness if Republicans suddenly thought tax increases are a good thing.
> reshoring
A tax on ordinary people that goes to welfare for US corporations.
Neat as in fantastic - it literally can't get any better - for the oligarchs. Tax the poor, and tell them we're collecting money for them, from the foreigners.
Raise and lower the rates willy-nilly, no need to really justify why you're squeezing who.
But here’s the hard truth: the US has needed to raise taxes for decades given its inability to reduce spending.
Hence they massively inflating runaway deficit. If this is the only way Americans will accept tax increases, and they aren’t willing to decrease spending, then this policy will ironically end up being the only way forward to climb out of the financial hole.
There's an argument that domestically produced goods would substitute for imported goods leaving the market, but markets are so global and intertwined now that even domestic goods have imported inputs that are also affected by tariffs, and there often are no domestic goods or not enough domestic goods produced to act as a price-competitive substitute, and companies are not going to invest a ton of money into expanding domestic capacity, when tariffs are imposed on the whim of a lunatic and will probably be eventually tossed out by the supreme court or congress.
As a Canadian, I now avoid American products and retailers as much as possible. This isn't just political (Trump has repeatedly threatened to annex Canada). This is about filthy lucre too.
Anything manufactured in the U.S. with tariffed inputs (e.g. Steel, Aluminum, softwood) is more expensive now. Foreign goods that merely pass through the U.S. on their way to Canada are not supposed to be tariffed, but many U.S. retailers simply don't do the paper work necessary to make that happen, no doubt because the Trump administration has made that paperwork so chaotic and difficult to do.
The upside is that Americans aren't just paying for 95% of these tariffs, they're losing export business from the rest of the world too. On top of this is the additional cost of unpredictability. Is the U.S. about to slap additional tariff's on the EU because of Trump's Greenland ambitions? If you're planning a project in Canada, you'd be wise to avoid any U.S. products that use EU inputs for the foreseeable future too.
Its still a dumb idea since any following administration could reverse the policy, so why invest in local manufacturing?
‘US Americans’ makes it sound as if a distinction is being drawn between Americans inside and outside of the US or something
E.g. in Germany, inhabitants of the US are usually called "US amerikaner", so this is a direct translation (the Kiel institute is in Germany).
It's just Germans being stereotypically precise about things (and reminding citizens of the USA that they aren't the only people in the Americas).
"US Americans" is routinely used to name "people in the US", since "Americans" is ambiguous, and "US citizens" is more restrictive and explicitly excludes residents that are not citizens.
Non-US Americans don't seem to care, and they think it's silly that I'd wonder whether they did.
It still feels dismissive and rude, so I try to avoid it -- but evidently it's not a significant or widespread concern among those with standing to be offended.
The broader term is "North American"
Not true. Tax burdens can fall incredibly unequally depending on market dynamics.
I had to pay like 20% of the cost of the item before DHL would even deliver it.
The claim of this analysis is a significant backpedaling on the narrative they've been wrong about regarding the effects of tariffs. Instead of trying to reposition the goal posts on the effects of tariffs, it would be far more productive to simply acknowledge that the original dire predictions of tariffs did not manifest.
Tariffs are like a military tactic, its not good for the domestic economy, its good for the military.
Without an opinion on the actual claim here (although I'm skeptical of a claim of 96%, given the relatively moderate inflation in the US in 2025), I think this quote by itself (first bullet point of the abstract) should disqualify this as a serious analysis - no academic paper uses this language, only biased think tanks, and the fact that it's a German think tank doesn't change that.
Chuckles in German.
(Most MAGA right know this, don't care, see tariffs as a hammer. But they are hitting all of us)
That is its own kind of burden. We are shooting ourselves in the foot here, but but I think we're getting the other guy's foot to the tune of a bit more than 4%.
It's mutually assured destruction logic. I hate everything about it, but this seems like a mischaracterization of its efficacy.
Go actually read the pdf. Their methodology conflates any and all price increases of foreign goods as being a burden bore upon Americans. No talk of purchasing habits changing towards domestic products. Nope. Oh and does it account for recent price increases across the board related to inflation? Nope. It (I would argue intentionally) does not control for that at all.
Pure propaganda from a foreign think tank to convince you to go back to policies where American exports got taxed, but theirs did not.
I don't mind people being ignorant. We all are at some point. We all learn. But what's really depressing is that people who wear their ignorance and intentional unwillingness to learn like it's a badge of honor.
In the early 2010s I had discussions with people who pushed the idea of the resurgence of anti-intellectualism in the US, which I dismissed at the time. I think about that a lot.
The dumbing down of American is most evident in the slow decay of substantive content in the enormously influential media, the 30 second sound bites (now down to 10 seconds or less), lowest common denominator programming, credulous presentations on pseudoscience and superstition, but especially a kind of celebration of ignorance”
Carl Sagan, The Demon-Haunted World: Science as a Candle in the Dark
Most directly, when foreign products become more expensive, people may choose a local product that was previously seen as too expensive. So it generally has a negative effect on the foreign economy and boosts local production.
Unfortunately, it also drives the foreign companies to become more efficient so they can get their prices back down, while giving the local producers a crutch to justify higher prices and stagnate.
And there are other side effects, and all of the side-effects have side effects of their own. Economies are complicated.
And yet everyone who voted for the pumpkin idiot don’t believe it. They think 2 plus 2 is 30T enough to pay off the debt. Idiots. The lot of them and anyone here who voted for this. I said it. And I’ll say it again. The man is enacting project 2025 and ruining the country and some of you are laughing giddily while it burns.
Yeah no need for coffee beans in USA.
Seems more like from taxing companies to taxing citizens.
First of all, the summary of the article (I did not read the article) clearly states that foreign exporters did not eat the tariffs, instead they held their prices, American consumers paid for the tariffs, and that trade volumes collapsed.
"trade volumes collapsed" - so, Americans did not buy foreign goods that they did not need/want at those prices, or found an alternative (presumably American) product to substitute. American consumer spending increased in 2025 and inflation settled down to a reasonable level. It seems that consumption shifted to domestic products.
That does not appear to be a good outcome, economically. . Second, tariff's are a tax. No sh-t. But so are VAT taxes, which are very high throughout many countries, and no one seems to believe they are the downfall of these countries. You can argue which is "better" or "fairer", but from the consumer point of view, VAT makes everything more expensive and tariffs make only foreign goods more expensive. You can say that VAT forces everyone, foreign and domestic to compete and be more efficient, while tariffs penalize foreign production and rewards domestic production, even if some domestic production is less efficient. But both are taxes, and at least the American consumer can choose whether or not to pay that tax.
While I disagree with tariffs, and especially disagree with how they are being wielded, the economic effect that they have had on Americans in 2025 is to shift away from foreign imports, buy more domestic products, and they have not increased inflation. Neither did the tariffs on Tr-mps first term on China.
If a 20% VAT was instituted, I would think that that would have had a much larger "tax" effect, and would have taken away peoples choice on whether or not to pay that tax. Yet, the VAT would be considered "good".
I think the biggest issue here is the serious negative impact on our relationships with our allies.
“Dear Jonas: Considering your Country decided not to give me the Nobel Peace Prize for having stopped 8 Wars PLUS, I no longer feel an obligation to think purely of Peace, although it will always be predominant, but can now think about what is good and proper for the United States of America. Denmark cannot protect that land from Russia or China, and why do they have a “right of ownership” anyway? There are no written documents, it’s only that a boat landed there hundreds of years ago, but we had boats landing there, also. I have done more for NATO than any other person since its founding, and now, NATO should do something for the United States. The World is not secure unless we have Complete and Total Control of Greenland. Thank you! President DJT”
Given that, should it be any surprise at all that Trump has been gaslighting America on who pays for his tariffs?
And guess what mechanism he's brought to bear on the countries that do not see things his way when it comes to Greenland?
Talking about Kiel, the non existent document was signed there: https://en.wikipedia.org/wiki/Treaty_of_Kiel
It's entirely possible he's not even informed enough on the issue to be intentionally lying.
What is misleading is labeling a global system marked by large, persistent imbalances as benign or indicative of "free trade". A healthy free trade system should have balanced trade, and the reasons that are not are unfortunately the fault of surplus nations like China or the EU. I know, its unintuitive, but going back to Bretton Woods to IMF analysis will back this point.
P.S if one wants to note the grocery shop analogy, a better analogy is that if you count up all your transactions, your income should exceed your spending, or else you're probably in trouble. That's roughly the problem here, but made more complex with the shenanigans of the US dollar.
For serious penalty, all those TechBro cronies need to have all assets seized. They are imcompatible with democracy.
Unfortunately, this didn't get a lot of attention, but they also threw a flash-bang grenade and tear gas at a car filled with six children. A six month old baby had to get CPR from her mom. Two kids were hospitalized.
None of this is acceptable. And their overtly violent behavior has nothing to do with enforcing the law.
I think Americans past the point where individual instances of police violence can shock us into taking political action (which is extremely risky in any case). It’s going to take kilodeath crimes, I imagine.
Our economy remains robust (down jackets moving like mad in Minneapolis) and the number of native-born Americans and legal aliens working is higher than ever. Illegal aliens are either heading for the door or being pushed out the door.
USA increased payroll employment (+584,000 jobs in 2025). Unemployment rate has decreased to 4.4%. We show gains in food services, healthcare, and social assistance, but retail trade has declined (necessarily). The labor market is stabilizing and expanding more slowly than before. Private payrolls have risen an average of 43,000 jobs/month over the past six months. Wage growth eased and average hourly earnings are up 3.8% over the past year.
We're much better off and it is showing: the US economy grew by 4.3% in the 3rd quarter of 2025, while Germany's GDP grew by 0.2% for the year. The German economy is so far down, some websites quit updating website statistics years ago, e.g.:
https://georank.org/economy/germany/united-states
The Kiel Institute may be trying to draw German voters' eyes away from their government's poor economic policies, e.g.,
"Germany’s economy is so bad even sausage factories are closing"
https://www.economist.com/europe/2026/01/15/germanys-economy...
Of course that is another "tabloid" journal of the British strain. Told you they're really, really good at feeding the flames with their journalism.
[Strains of Carly Simon's "Nobody does it better,... makes you feel sad for all the rest..."]
https://www.bing.com/videos/riverview/relatedvideo?q=nobody+...
> The reason for tariffs is NOT to reduce prices but to bring production (jobs, capacity) home.
Tariffs can be used for many purposes. I would say this is administration is clearly not using them to bring jobs home. Earlier tariffs were lowered/dropped when trade deals were signed, and the current ones are clearly a way to strong arm Europe to giving up its territory.
> Unemployment rate has decreased to 4.4%.
Decreased from where...? Not including the pandemic, 4.4% is the highest rate in almost a decade. Unemployment is clearly rising: https://www.bls.gov/charts/employment-situation/civilian-une...
Meanwhile, he puts all your tax dollars in his and his friend's pocket...
Otherwise "broad" producer price index down primarily due to coal prices getting creamed by renewables, also cheap RU gas. When fossil/input prices drop, PRC PPI always drops. Industrial profit index for manufacturing sectors up 5-10%. Note broad industrial profit index down because it heavily weights state owned / SEO fossil sectors (aforementioned coal+oil dropped by 20-40%). Decompose industrial profits and story is PRC manufactures getting cheap energy and cheap inputs while growing profits more than they lower prices, aka why PRC winning trade game in the first place.
Looks like around ~2% a year
Click to, say, 3 year view of https://ycharts.com/indicators/china_producer_price_index
I suppose the issue would be for those on the lower end of the earnings distribution, as they pay little to no federal income tax, but would be hit by a consumption tax. Though I do wonder if we could see wages increase when we don’t have to compete as much with low production costs in China.
Also, reduced competition from China does not imply higher wages unless labor has bargaining power and firms pass gains to workers. Historically it has been passed to shareholders not workers.
Finally, tariffs mainly protect manufacturing jobs. AI threatens white-collar and service work
Also, this obsession over the importance of accessing US consumers feels ridiculous. If Americans aren't buying then it means more stuff for everyone else.
EU/China etc. sends actual things to US and US sends back dollars that are created out of thin air. It must be a restructuring pain more than anything since US doesn't actually export much goods. With the proliferation of cheap and available solar energy the trade with US can halt, endure the pain of restructuring came out of the other side with using the produced goods domestically instead of sending them to US and replace the US services with domestic ones. Then US can produce their things that they consume and have 350M market for the US companies instead of 7B.
It almost looks like Trump is Pushing for US irrelevance, its vey strange. Why would US be looking to abandone such an advantageous position? The people in the rest of the world are working their asses off, breathing toxic air just to obtain dollars.
I'm pretty sure someone has done an analysis on VAT since it was introduced 58 years ago...
It's a really destabilising policy as you can see.
Tarrifs are a restrictor plate on a big block V-8 engine.
Take it away and you get more power, more noise, more freedom.
Don’t you want more freedom?