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Finance“The academic studies Fajgelbaum et al. (2020) and Amiti et al. (2019) concluded that the costs of tariffs are borne primarily by domestic consumers and importers.”
Submitted by Bold Dolphin ec25
The conclusion
The named studies did characterize tariff costs as falling mainly on U.S. importers and consumers. Both Amiti et al. (2019) and Fajgelbaum et al. (2020) reported near-complete pass-through of the 2018 tariffs into U.S. prices, meaning foreign exporters did not absorb most of the burden. Additional findings about producer gains or retaliation do not negate that core conclusion.
Caveats
- These findings are specific to the 2018 U.S. tariff waves and should not be generalized automatically to all tariffs or later periods.
- Amiti et al. often said tariffs were borne "almost entirely," so the result was not mathematically absolute in every channel.
- The studies also identified other important effects, including some protection for domestic producers and retaliatory costs for U.S. exporters.
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Sources
Sources used in the analysis
Finally, there is a complete pass-through of tariffs to duty-inclusive prices (i.e., before-duty prices do not fall), implying that the costs of U.S. tariffs are paid by U.S. importers. Our structural estimation cannot reject a perfectly horizontal foreign supply curve. Intuitively, what this means is that the full incidence of the tariff is borne by the importers.
did not fall, implying complete pass-through of tariffs to duty-inclusive prices. The resulting losses to U.S. consumers and firms that buy imports was $51 billion, or 0.27% of GDP.
Our analysis suggests that producer and consumer prices are about a third of a percent higher in 2018 as a result of higher import tariffs. We find that the higher import tariffs had immediate impacts on U.S. domestic prices. Our results suggest that the aggregate consumer price index (CPI) is 0.3 percent higher than it would have been without the tariffs.
In the wake of this increase in trade protection, the United States experienced substantial increases in the prices of intermediates and final goods... and the complete pass-through of the tariffs into domestic prices of imported goods. Therefore, the full incidence of the tariffs has fallen on domestic consumers and importers so far, and our estimates imply a reduction in aggregate US real income of $1.4 billion per month by the end of 2018.
Using data from 2018, a number of studies have found that recent U.S tariffs have been passed on entirely to U.S. importers and consumers. [...] Using another year of data including significant escalations in the trade war, we find that U.S. tariffs continue to be almost entirely borne by U.S. firms and consumers.
We find that the U.S. tariffs were almost completely passed through into U.S. domestic prices, so that the entire incidence of the tariffs fell on domestic consumers and importers. Our results imply that the tariff revenue the U.S. is now collecting is insufficient to compensate the losses being born by the consumers of imports.
A robust finding across these studies is that the pass-through from 2018-19 tariffs to tariff-inclusive import prices was essentially complete; that is, the price faced by U.S. importers rose by the full amount of the tariff. Amiti et al. (2019) also present evidence suggesting that tariffs increased U.S. producer prices by 'protecting the output' of U.S. industries from competition and by raising inputs costs to domestic producers.
We find that the producer and consumer losses from higher tariff-inclusive prices were $68.8 billion, or 0.37% of GDP. This number comes from our estimation of a complete pass-through at the variety level.
The finding that the Trump administration’s tariff changes have been almost entirely passed through into domestic prices, leaving exporter prices unchanged... Within this framework, an ad valorem tariff on imports of τ raises the cost of the imported good in the domestic market from p⁎ to p⁎(1 + τ).
Using another year of data including significant escalations in the trade war, we find that the costs of the US tariffs continue to be almost entirely borne by US firms and consumers. We show that the response of import values to the tariffs increases in absolute magnitude over time, consistent with the idea that it takes time for firms to reorganize supply chains.
Fajgelbaum et al. (2020) use U.S. trade data through April 2019 to assess the impacts of the 2018 tariff waves on the U.S. economy.
Tariffs are increasing prices for both imported and domestic goods, according to Harvard Business School Professor Alberto Cavallo, who is tracking prices in real time. While manufacturers are absorbing some of the tariffs so far, he says costs are already being passed on to consumers. A recent analysis by the global investment firm Goldman Sachs found that U.S. consumers will bear the economic brunt of the tariffs, absorbing 55% of tariff costs by the end of this year, with American businesses absorbing 22% of the costs and foreign exporters absorbing 18%.
Therefore, the full incidence of the tariffs has fallen on domestic consumers and importers so far, and our estimates imply a reduction in aggregate US real income of $1.4 billion per month by the end of 2018.
Importers and consumers in the US bear 96 percent of the tariff burden, according to new research from the Kiel Institute for the World Economy. The research team analysed more than 25 million shipment records covering a total value of almost four trillion US dollars in US imports. Foreign exporters absorbed only about four percent of the tariff burden, 96 percent passed through to US buyers.
Finally, there is a complete pass-through of tariffs to duty-inclusive prices (i.e., before-duty prices do not fall), implying that the costs of U.S. tariffs are paid by U.S. importers. Our structural estimation cannot reject a perfectly horizontal foreign supply curve. Intuitively, what this means is that the full incidence of the tariff is borne by the importers.
Amiti et al. (2019) state that the relative price increase in the domestic market was the same magnitude as the tariff increases (10-30%), indicating a significant tariff pass-through to consumers... Prior literature has found that tariffs can create an additional burden on importers, which is passed through to consumers through increased consumer prices.
The findings imply complete pass-through of tariffs to duty-inclusive import prices, a finding that is systematic across products with heterogeneous characteristics. The resulting real income loss to U.S. consumers and firms who buy imports can be computed as the product of the import share of value added (15%), the fraction of US imports targeted by tariff increases (13%), and the average increase in tariffs among targeted varieties (14%).
In our baseline estimate, 90% of the tariffs are passed through to tariff-inclusive prices. Among their stated rationales, the tariffs have been effective at raising federal revenue and diverting trade from China.
We analyze the short-run impact of this return to protectionism on the U.S. economy. Import and retaliatory tariffs caused large declines in imports and exports.
Domestic producers have absorbed the vast majority, around 60% of the tariff shock so far, while foreign firms have absorbed almost none. Consumers have seen an increasing share of the cost passed on to them at this stage, meaning the tariffs have mainly squeezed company profit margins rather than significantly raising retail prices. Looking ahead, our analysis suggests that if domestic firms eventually restore their usual profit margins, more of the tariff costs could be passed on to consumers.
In this paper, we examine the effects of U.S. import tariffs enacted during 2018-2019 and 2025, with a focus on these three predictions. Using data from 2018, a number of studies have found that recent U.S tariffs have been passed on entirely to U.S. importers and consumers.
The paper 'The Impact of the 2018 Tariffs on Prices and Welfare' by Mary Amiti, Stephen J. Redding, and David E. Weinstein (NBER Working Paper 25672, 2019; Journal of Economic Perspectives 2020) finds nearly complete pass-through of U.S. tariffs to domestic U.S. prices of imports, indicating that the tariff costs were borne almost entirely by U.S. consumers and firms, with negligible impact on foreign exporters.
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Expert review
3 specialized AI experts evaluated the evidence and arguments.
Expert 1 — The Logic Examiner
The claim is specifically about what Fajgelbaum et al. (2020) and Amiti et al. (2019) concluded, not about the broader empirical truth of tariff incidence. Sources 1, 2, 6, 4, 9, and 15 directly quote or summarize these two studies, and all confirm that both papers explicitly concluded near-complete or complete pass-through of tariffs to U.S. domestic prices, with the full incidence borne by domestic consumers and importers. The Opponent's argument introduces two logical fallacies: first, a false equivalence by conflating the separate finding that tariffs raised U.S. producer prices (a 'protection effect' on domestic output prices) with the incidence question of who bears the tariff cost — these are distinct phenomena and Amiti et al. explicitly address both without contradicting their incidence conclusion; second, an appeal to a lower-authority non-academic source (Fulcrum Asset Management, Source 20) to rebut what the named academic studies concluded, which is a category error since Fulcrum's findings about 2025 tariff dynamics do not alter what Amiti et al. (2019) and Fajgelbaum et al. (2020) concluded about 2018 tariffs. The claim accurately characterizes the stated conclusions of both named studies, and the logical chain from the primary sources to the claim is direct and unambiguous.
Expert 2 — The Context Analyst
The claim accurately characterizes the core conclusions of both Fajgelbaum et al. (2020) and Amiti et al. (2019): both studies found near-complete or complete pass-through of tariffs to U.S. domestic prices, meaning the incidence fell on domestic consumers and importers rather than foreign exporters (Sources 1, 2, 4, 6, 7, 9). The opponent's points about producer price effects and Fulcrum's findings do not undermine the claim: the producer price 'protection' effect noted in Source 7 is a separate general-equilibrium channel, not a contradiction of the incidence finding; and Fulcrum (Source 20) is a non-academic asset manager commentary on 2025 tariffs, not a characterization of what the 2019-2020 academic studies concluded. The claim is specifically about what those two academic studies concluded, and the evidence overwhelmingly confirms they concluded domestic consumers and importers bore the costs. Minor missing context includes that Amiti et al. used the qualifier 'almost entirely' rather than 'primarily,' and that the studies covered 2018 tariff waves specifically, but these do not materially distort the claim's truthfulness.
Expert 3 — The Source Auditor
High-authority primary academic sources directly addressing the named studies—QJE's Fajgelbaum et al. (2020) (Sources 1-2) and Amiti et al. (2019) as an NBER working paper and AEA Journal of Economic Perspectives article (Sources 6 and 4, also echoed by the Fed's literature summary in Source 7)—state (near-)complete pass-through to tariff-inclusive import prices and explicitly describe the incidence as falling on U.S. importers/consumers rather than foreign exporters. The opponent's counter relies mainly on a non-peer-reviewed asset manager commentary (Source 20) and a misread of Source 7 (which notes additional producer-price channels but does not overturn Amiti et al.'s core incidence conclusion), so the most reliable independent evidence supports the claim that these studies concluded costs were borne primarily domestically by consumers and importers.
Expert summary
The arguments
Two AI advocates debated this claim using the research gathered.
Argument for
Fajgelbaum et al. (2020) explicitly find “complete pass-through of tariffs to duty-inclusive prices” with “before-duty prices [that] do not fall,” which directly implies the tariff incidence is paid by U.S. importers (and thus domestically) rather than foreign exporters (Source 1: QJE, “The Return to Protectionism”; Source 2: QJE PDF). Likewise, Amiti et al. (2019) conclude U.S. tariffs were “almost completely passed through into U.S. domestic prices” so “the entire incidence of the tariffs fell on domestic consumers and importers,” a conclusion reiterated in the AEA summary that “the full incidence…has fallen on domestic consumers and importers” (Source 6: NBER WP 25672; Source 4: AEA JEP).
The Proponent's argument selectively cites pass-through findings while ignoring that Source 7 (Federal Reserve Board) explicitly documents Amiti et al. (2019) also found tariffs raised U.S. producer prices by 'protecting the output' of domestic industries — a distributional benefit to domestic producers that materially qualifies any unambiguous claim that costs fall 'primarily' on consumers and importers. Furthermore, the Proponent commits the fallacy of incomplete evidence by entirely disregarding Source 20 (Fulcrum Asset Management), which directly refutes the claim's framing by finding domestic producers absorbed approximately 60% of the tariff shock through compressed profit margins, demonstrating that the studies' conclusions are neither as settled nor as unqualified as the Proponent asserts.
Argument against
While Source 7 (Federal Reserve Board) confirms that Amiti et al. (2019) found near-complete pass-through to import prices, it also explicitly notes the study found tariffs raised U.S. producer prices by 'protecting the output' of U.S. industries — a benefit to domestic producers that contradicts the claim that costs fall 'primarily' on consumers and importers without qualification. Furthermore, Source 20 (Fulcrum Asset Management) directly refutes the claim's framing, finding that domestic producers absorbed approximately 60% of the tariff shock through squeezed profit margins, undermining the assertion that the studies' conclusions represent a settled, unambiguous finding that costs are borne primarily by consumers and importers.
The Opponent conflates a separate general-equilibrium effect—tariffs raising some U.S. producer prices—with tariff incidence, but Amiti et al. (2019) still conclude the tariffs were “almost completely passed through into U.S. domestic prices” such that “the entire incidence…fell on domestic consumers and importers” (Source 6: NBER, “The Impact of the 2018 Trade War on U.S. Prices and Welfare”; Source 4: AEA, “The Impact of the 2018 Tariffs on Prices and Welfare”), consistent with the Fed's summary of essentially complete pass-through to the price faced by U.S. importers (Source 7: Federal Reserve Board, “Detecting Tariff Effects on Consumer Prices in Real Time”). The Opponent's reliance on Fulcrum is a classic appeal to a lower-authority, non-academic commentary to override the motion's narrow question—what Fajgelbaum et al. (2020) and Amiti et al. (2019) concluded—which is stated unambiguously as full/near-full domestic incidence in the primary academic sources (Source 1: QJE, “The Return to Protectionism”; Source 6: NBER, “The Impact of the 2018 Trade War on U.S. Prices and Welfare”).