A new study by trade economist Caroline Freund examining the 2025 US tariffs reveals that foreign exporters shouldered 47 percent of the tariff burden while American importers covered the remaining 53 percent, a distribution far different from what earlier research suggested. The paper, which analyzed detailed import data from September 2023 through January 2026, challenges previous studies that found the costs were passed almost entirely to US importers. Published by the Tax Foundation, the research doesn't settle whether Americans are actually better off under the current tariff system, but it does show that foreign sellers are paying more of the bill than initially thought.
Freund examined trade data covering 50 US trading partners that represent 95 percent of American goods imports from 2024, tracking how prices changed over 12-month periods before and after tariffs took effect. The study found that "unit value"—what exporters receive, calculated by dividing customs value by quantity—declined, while the "landed cost" paid by importers including tariffs rose by less than the full tariff amount. If importers had borne the entire burden, unit values would've stayed flat and importer prices would've climbed by exactly the tariff amount. The paper's distinctive approach weights the data by actual pre-trade war import volumes, which prevents treating a product category with $100 in imports the same as one with $100 billion in imports. Throughout 2025, this weighting method consistently showed foreigners absorbing nearly half the tariff burden.
The research provides some evidence for what economists call a terms-of-trade effect, where a large importer uses its market power to push down pre-tariff prices when it imposes tariffs. However, the authors are careful to note that "The finding that foreigners absorbed just over half the tariff does not imply the tariffs were successful on welfare grounds." According to the study, answering whether Americans benefited overall would require measuring losses from disrupted trade flows, deals that never happened, retaliation from trading partners, economic uncertainty, and lost efficiency. The revenue extracted from foreign exporters would need to exceed all those costs plus the tariff burden that fell on US importers for American welfare to improve on net.
The picture gets more complicated because much of the 2025 tariff revenue is currently being refunded to US importers after the Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act. These refunds effectively transfer money from foreign exporters—who absorbed part of the economic burden—to US importers who are getting their payments back, leaving the federal government with no revenue gain from the illegal tariffs and sometimes revenue losses from interest on refunds. The economic distortions and damage remain untouched. Freund warns that countries trying to extract price concessions through tariffs can create a prisoner's dilemma where multiple nations do the same thing simultaneously, reducing global welfare. She argues that "Retaliation by trading partners and the erosion of the rules-based system may prove to be the most important long-run costs of the episode."
The study suggests US tariffs are inflicting widespread economic harm even as they shift some costs onto foreign sellers. While the evidence shows America extracted some terms-of-trade gains—forcing exporters to accept lower prices—it doesn't prove Americans are better off overall from the tariff regime. The report leaves open whether the long-term costs from damaged trade relationships and a weakened international system will outweigh any short-term gains, especially with refunds erasing much of the revenue that might've justified the disruption.