The study notes that the costs of tariffs enacted by the Trump administration are "falling mostly on domestic importers and consumers". In putting a number to that, the study reveals that US consumers are bearing around a third of the tariff burden currently. And if the tariffs are going to stay for longer, that cost will increase even more.
For now, it is noted that US exporters are only absorbing a small fraction of the higher tariff-related costs. It is being estimated that a 10% increase in tariffs implies only a 9.5% increase in prices.
Overall, it is a tough situation for US consumers. The current estimate shows that they are already being burdened by about a third of the cost. But if US firms exhaust their ability to absorb the tariffs and pass it on down the chain, the burden for households could rise to over half.
This also implies that US firms would absorb 40% of higher tariff costs in the longer-term should the extent to which exporters absorb tariffs remains limited in scope.
While the US is the one being hit hardest from their own tariffs, European exporters are not immune to the situation. The study predicts that a 10% increase in tariffs would also result in a 4.3% decline in import volumes in the case of product categories that are still traded under tariffs.
The full study can be found here.
