Federal Reserve Study Confirms Americans Bear 94% of Tariff Costs, Low-Income Households Hit Hardest as Food and Consumer Prices Surge

By September 2025, multiple independent economic analyses confirmed that the burden of Trump’s tariff regime fell overwhelmingly on American consumers rather than foreign exporters. A New York Federal Reserve study found that Americans bore 94% of tariff costs as of August 2025 — directly contradicting the administration’s claim that foreign countries were paying the tariffs.

Disproportionate Impact on Low-Income Households

The tariff burden was steeply regressive. Low-income households, which spend a higher proportion of their income on consumer goods and groceries, experienced the largest proportional cost increase. Product categories with the steepest price increases — clothing, household tools, small appliances, personal care products — are necessities that consume a larger share of low-income budgets.

Documented Price Increases

Harvard Business School Pricing Lab data documented specific category impacts:

• Food prices: Rose 1.6% in the month following Liberation Day alone (equivalent to a full year of prior grocery inflation)
• Imported goods overall: Up approximately 4.0% between March and September 2025
• Domestic goods: Up 2.0% as reduced import competition allowed domestic producers to raise prices
• Clothing accessories, jewelry, household tools: Among the steepest category increases

Delayed Cost Pass-Through

The worst was yet to come. In 2025, businesses absorbed roughly 80% of tariff costs to maintain market share. Analysts projected this ratio would invert by mid-2026, with consumers absorbing 80% of costs as businesses exhausted their ability to compress margins. The Tax Foundation estimated per-household costs rising from $1,000 in 2025 to $1,300-$1,500 in 2026.

Capture Significance

The tariff regime functioned as a massive regressive tax — imposed by executive fiat without Congressional approval, falling hardest on those least able to afford it, while benefiting a narrow set of domestic producers and generating revenue controlled by the executive branch. The economic burden on working families existed in direct tension with the administration’s populist rhetoric, representing a form of economic extraction dressed in nationalist language.