New study says Americans bear most of Trump’s tariff costs – Valor International
President Donald Trump’s recent effort to reimpose tariffs on Brazil and other nations is seen as an “own goal” that ultimately harms American businesses and consumers. A study by economists from the Kiel Institute, a German think tank, states that although Trump claims these tariffs will rebalance trade and fix unfair practices, the report—titled America’s Own Goal: Who Pays the Tariffs?—finds that the U.S. is actually acting against its own best interests. The authors highlight that American importers and consumers end up paying almost all the tariff costs.
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The study revealed that foreign exporters bear only 4% of the tariff burden, with 96% being passed on to U.S. consumers. While they did not explicitly comment on this report, economists interviewed by Valor largely agreed. Lívio Ribeiro, a researcher at FGV Ibre and a partner at BRCG Consulting, stated, “Ultimately, tariffs are a self-inflicted wound for Trump.” He explained that it’s well known that the costs fall primarily on American economic agents. Although consumers might not see the impact immediately, importers and retailers are shouldering most of the increased costs. Numerous studies have documented and measured this effect.
Ribeiro argued that the inflationary impact of tariffs has not yet fully reached American households. For now, he said, U.S. consumers are more affected by fuel prices, which have come under pressure because of the conflict involving Iran. Eventually, however, higher import costs will work their way through supply chains and into final prices. With the U.S. economy continuing to outperform expectations, the labor market stabilizing, and economic activity showing signs of renewed strength, Ribeiro said retailers, logistics companies, and manufacturers that rely on imported inputs are likely to pass those costs on.
Otaviano Canuto, a former World Bank vice president and a fellow at the Policy Center for the New South Wales, also believes the burden ultimately falls on the U.S. economy. “Sometimes companies choose to absorb the impact by reducing profit margins, but that is not sustainable,” he said. “Sooner or later, they have to raise prices.” According to Canuto, the biggest burden falls not only on consumers but also on manufacturers that depend on imported inputs. “They lose competitiveness,” he said.
This week, following investigations launched last year under Section 301 of the U.S. Trade Act of 1974, the Office of the U.S. Trade Representative (USTR) announced plans to impose 25% tariffs on a broad range of Brazilian exports. The proposed measures cite issues ranging from Brazil’s Pix instant-payment system, which Washington argues disadvantages U.S. competitors, to the temporary suspension of the social-media platform X for failing to comply with Brazilian court orders, to environmental concerns such as deforestation.
The United States also announced that Brazil, along with more than 60 other countries, could face an additional 12% tariff on exports because of allegations involving forced labor. U.S. authorities argue that such practices, even when isolated rather than systemic, undermine the competitiveness of American companies. The Section 301 initiative threatens to revive the sweeping tariff measures imposed in 2025, when the United States introduced so-called reciprocal tariffs against nearly every major trading partner.
According to the Kiel Institute, U.S. customs revenue increased by roughly $200 billion in 2025. However, the study argues that the additional costs were borne almost entirely by Americans, undermining the rationale for the policy. The report specifically cites Brazil, whose exports faced tariffs of up to 50% in 2025 before exemptions were granted, and the U.S. Supreme Court later struck down the tariff regime imposed by executive action.
Examining the dynamic effects of the 2025 tariffs on Brazilian exports, the researchers found that Brazilian products sold in the United States became more expensive than comparable goods imported from other countries in the region. “After the imposition of a 50% tariff, Brazilian exporters did not substantially reduce their prices in U.S. dollars,” the study said. “The estimated coefficients remained close to zero, with confidence intervals excluding economically meaningful price reductions. This finding confirms our baseline results in a setting where Brazilian exporters did not absorb the tariff. The burden of the 50% tariff was passed almost entirely to U.S. importers.”
The study suggests that the primary negative consequence for Brazilian exporters is lower trade volumes with the United States. But American companies and consumers also suffer losses. Researchers found a similar pattern in India. With more detailed customs data available there, they were able to more clearly identify that the main effect of the tariffs was a reduction in trade volumes, without corresponding gains for American consumers.
One of Trump’s central arguments is that limiting imports will help restore U.S. manufacturing strength lost over decades of globalization, particularly since the 1990s. The researchers dispute that view. They argue that although the United States remains a crucial market, it is not the only one, and that exporting countries are likely to find alternative destinations over the medium and long term. Moreover, many U.S. importers have long-standing relationships with foreign suppliers and cannot easily replace them. “This gives existing suppliers pricing power,” the study said. “They know their U.S. customers cannot immediately switch partners and therefore face less competitive pressure to lower prices.”
Carlos Primo Braga, an associate professor at Fundação Dom Cabral and a former World Bank director, noted that Washington used Section 301 against Brazil in the 1980s over the country’s Information Technology Law. “That led to tariffs and restrictions on technology exports to Brazil,” he said. “The law itself was not significantly altered, although improvements were made to intellectual-property protection.”
The broader policy shift, however, only occurred during the 1990s and was driven more by changes in Brazil’s own trade policy than by Section 301 pressure, he added. In Braga’s view, this week’s decisions demonstrate “very clearly” that the goal is to restore tariff policies that had been blocked by a Supreme Court ruling earlier this year. “There is certainly a political aspect regarding Brazil,” he said. “But it is important for Brazil to recognize that this forms part of a broader U.S. strategy centered on the use of tariffs.”
As in 2025, Brazil’s response should be to diversify its export markets, Braga argued. He also recommended that the country deepen its commitment to the European Union–Mercosur trade agreement, which entered provisional implementation in May. “The idea that tariffs can revive domestic industry has many flaws, and 95% of economists remain highly skeptical that tariffs will lead to meaningful reindustrialization of the United States,” Canuto said. He argued that the Brazil-specific Section 301 tariffs, as well as the proposed measures targeting countries accused of labor abuses, are primarily an attempt by Trump to rebuild the tariff wall that was dismantled by the Supreme Court in February.
Ribeiro cautioned that the situation remains fluid. “It does not seem to me that the final scope has been defined,” he said. “Section 301 investigations are lengthy and highly specific. They can lead to far-fetched conclusions, as we are seeing not only in Brazil’s case but also in the proposal to tax countries accused of inadequate labor practices.” He argued that the labor-related tariffs are broad and weakly supported, creating room for negotiation.
The Brazil-specific Section 301 case, however, is different. “It is the result of a formal investigation, hearings, and a process in which the arguments presented by the Brazilian government were clearly rejected by U.S. negotiators,” he said. As a result, it is harder to predict whether—and when—the proposals might be softened.
Ribeiro also noted that the dispute poses political risks for Trump, especially with midterm elections approaching later this year. “The situation is increasingly challenging for him due to the political pitfalls and controversies he's chosen to involve himself in,” he said. "Measures like these tariffs are unlikely to address the key issues for effective governance at the moment—specifically, maintaining majorities in both houses of Congress.”
This article was translated from Valor Econômico using an artificial intelligence tool under the supervision of the Valor International editorial team to ensure accuracy, clarity, and adherence to our editorial standards. Read our Editorial Principles.
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