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Nearly 90% of the cost of Trump’s tariffs have been borne by American consumers and businesses, according to the New York Federal Reserve. – Nam Y. Huh\/AP <\/p>\n Nearly 90% of the cost of Trump’s tariffs have been borne by American consumers and businesses, according to the New York Federal Reserve. – Nam Y. Huh\/AP <\/p>\n
A version of this story appeared in CNN Business\u2019 Nightcap newsletter. To get it in your inbox, sign up for free here<\/a>.<\/p>\n A new report from the Federal Reserve Bank of New York confirms what economists have long warned about: The burden of tariffs is borne almost entirely by the people living in the country that imposes them.<\/p>\n That simple fact \u2014 now learned experientially in 21st century America \u2014 is an Econ 101 lesson as foundational as supply and demand. \u2019Twas ever thus!<\/p>\n US businesses and consumers last year paid for nearly 90%<\/a> of 2025\u2019s import taxes, the Fed branch found. That\u2019s hardly surprising: The National Bureau of Economic Research and the Congressional Budget Office recently found<\/a> roughly the same thing<\/a>.<\/p>\n And while the New York Fed report didn\u2019t parse the split between businesses and consumers, the CBO report<\/a>, published Wednesday, estimated businesses would continue shrinking their margins slightly to offset the extra costs, while passing on the bulk of the levies \u2014 70% \u2014 to consumers. (As for those foreign exporters President Donald Trump has long claimed would foot the bill? They\u2019re taking on about 5%, the CBO estimates.)<\/p>\n In real dollar terms, the tariffs amounted to an average tax increase of $1,000 per household<\/a> in 2025, according to the non-partisan Tax Foundation.<\/p>\n Now, on one hand, these are just your standard academic mumbo-jumbo papers published by a bunch of nerds, for a bunch of nerds. The collective wisdom of economists has never much mattered to Trump when it comes to \u201cthe most beautiful word to me in the dictionary,\u201d as he once described tariffs.<\/p>\n But the CBO and New York Fed reports landed just as tariff fatigue is hitting hard in DC.<\/p>\n In a rare rebuke<\/a> of Trump\u2019s signature economic agenda, six House Republicans joined with Democrats on Wednesday in a vote that would effectively repeal his tariffs on Canada. The tariffs won\u2019t get repealed, mind you, because even if it passed the Senate, Trump would just veto it. But the brushback from Trump\u2019s own party members didn\u2019t go over well in the West Wing, as one might have guessed. Shortly after the vote, Trump responded with a threat of \u201cconsequences\u201d for \u201cany Republican\u201d in Congress who votes against tariffs.<\/p>\n Meanwhile, a Supreme Court ruling on the legality of Trump\u2019s tariffs is due any day, potentially tossing his whole agenda into upheaval.<\/p>\n In a statement, White House spokesman Kush Desai defended the tariff agenda, noting inflation had cooled and corporate profits have gone up even as \u201cAmerica\u2019s average tariff rate has increased nearly sevenfold.\u201d<\/p>\n \u201cThe reality is that President Trump\u2019s economic agenda of tax cuts, deregulation, tariffs, and energy abundance are reducing costs and accelerating economic growth,\u201d he said.<\/p>\n Of course, all of that is happening as everyday Americans seethe over the cost of living and increasingly hold Trump<\/a> and the Republicans responsible. Trump\u2019s campaign message of lowering prices on \u201cday one\u201d simply hasn\u2019t happened. (Except on a few items like eggs<\/a> \u2014 we can give him the W on that one, largely because farmers worked really hard to snuff out the bird flu that was crimping egg supplies and driving up prices.)<\/p>\n On paper, the US economy is humming along nicely. That\u2019s largely because the economy is measured in averages and aggregates.<\/p>\n Take, for example, the January jobs report<\/a> released Wednesday. On the whole, it looked surprisingly strong, with 130,000 jobs added, nearly double what economists had expected. But if you zoom in, almost all of the gains came from one sector, health care. Zoom in a little more, and virtually every other sector showed either weak gains or losses. In fact, for all of 2025, health care and social assistance accounted for 97% of all the job growth.<\/p>\n That is a prime example of what economist Diane Swonk of KPMG has called the \u201cone-legged stools\u201d<\/a> holding up the entire economy. Two other one-legged stools: Rich people doing shopping sprees, and giant tech companies shelling out hundreds of billions on AI infrastructure.<\/p>\n