How the United States is eating Trump’s tariffs

US companies and consumers are bearing the brunt of the country’s new import tariffs, early indications show, contradicting assertions by President Donald J. Trump and complicating the Federal Reserve's fight against inflation.

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Mr. Trump famously predicted that foreign countries would pay the price of his protectionist policies, wagering that exporters would absorb that cost just to keep a foothold in the world’s largest consumer market.

But academic studies, surveys and comments from businesses show that through the first months of Mr. Trump’s new trade regime it is US companies that are footing the bill and passing on some of it to the consumer—with more price hikes likely.

“Most of the cost seems to be borne by US firms” Harvard University professor Alberto Cavallo said in an interview to discuss his findings. “We have seen a gradual pass-through to consumer prices and there’s a clear upward pressure.”

A White House spokesperson said, “Americans may face a transition period from tariffs” but the cost would “ultimately be borne by foreign exporters.” Companies were diversifying supply chains and bringing production to the United States, the spokesperson added.

WHO IS EATING THE TARIFFS?

Mr. Cavallo and researchers Paola Llamas and Franco Vasquez have been tracking the price of 359,148 goods, from carpets to coffee, at major online and brick-and-mortar retailers in the United States.

They found that imported goods have become 4% more expensive since Mr. Trump started imposing tariffs in early March, while the price of domestic products rose by 2%.

The biggest increases for imports were seen in goods that the United States cannot produce domestically, such as coffee, or that come from highly penalized countries, like Turkey.

These price hikes, while material, have been generally far smaller than the tariff rate on the products in question — implying that sellers were absorbing some of the cost as well.