Who Wins and Loses When America Raises Tariffs?

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A tariff taxes goods arriving from abroad, and the importer is responsible for paying it. For the 2025 tariffs, New York Federal Reserve Bank researchers estimated that U.S. firms and consumers bore nearly 90 percent of the economic burden.

Winners include domestic producers of the taxed goods, which face less competition and can raise their own prices. A federal trade agency estimated that steel tariffs raised U.S. steel production by an average of 1.9 percent from 2018 to 2021. Losers can include American factories that buy those goods and face higher production costs. Exporters can lose too: the Agriculture Department estimated that foreign retaliation cost U.S. agriculture more than $27 billion in exports from mid-2018 through 2019. The question is whether protecting those producers is worth what buyers and exporters may pay for it.

Who pays the bill, and who receives the money

Tariffs are often used to protect domestic industries or gain leverage in trade negotiations. U.S. Customs and Border Protection (CBP) says the importer is ultimately responsible for paying the duty owed on an import. The foreign government does not become the taxpayer simply because the shipment came from its country.

A common type of tariff, called an ad valorem duty, is a percentage of the imported merchandise’s value. Other duties charge a specified amount per unit, and compound duties combine a value-based charge with a per-unit charge. A headline rate therefore says little about a bill until the product and the type of duty are known.

CBP collects applicable tariffs and deposits the revenue into the federal government’s General Fund, according to the Congressional Research Service (CRS). A protected company gains from weaker competition; it does not receive the customs payment collected on a competing import.

Who is legally required to pay and who ends up bearing the cost are different questions. New York Federal Reserve Bank researchers, using import data through November 2025, estimated that nearly 90 percent of the tariffs’ economic burden fell on U.S. firms and consumers. Foreign exporters can absorb part of a tariff by cutting their prices, with the availability of substitutes and buyers’ sensitivity to price changes helping determine the result. A duty paid by an importer can reach a household through a higher price, but the retail price need not rise by the full tariff rate.

A business paying more for imported inputs can pass the cost to customers, absorb it or change suppliers. Asked in a small-business survey how they responded to higher imported input prices, about 80 percent of goods and retail firms reported passing on at least some of the costs to customers, New York Federal Reserve researchers found. Absorbing the charge leaves less profit unless the business can cut another cost; switching suppliers depends on having an available substitute.

Steel and aluminum show what protection can achieve

The U.S. International Trade Commission (USITC) estimated the short-term effects from 2018 to 2021 of steel and aluminum tariffs imposed under Section 232, the law authorizing tariffs to address threats to national security. Its report, Economic Impact of Section 232 and 301 Tariffs on U.S. Industries, compares the average effects on covered steel and aluminum products with what would have happened without the tariffs.

Those results identify concrete beneficiaries: domestic steel and aluminum producers facing less competition from the taxed imports. Each figure estimates what the tariffs alone changed, not the industry’s whole change over those years. The price increases help explain both sides of the policy: better conditions for a seller, a more expensive purchase for a buyer. The average market-price increase also differs from the tax rate charged on an individual import.

For downstream industries, meaning businesses that use steel and aluminum to make other products, USITC estimated the tariffs reduced production value by $3.5 billion in 2021. An American factory can therefore be on the losing side even when the policy is described as protection for American manufacturing.

USITC explicitly said its report did not measure complete economy-wide effects and could not establish whether the tariffs produced a net benefit for the United States. It also did not estimate the tariffs’ effects on investment or their contribution to national security.

Consumers can pay more for domestic goods, too

University of Chicago research found that washer prices rose about 12 percent in the first half of 2018 after global washing-machine tariffs were announced, compared with a control group of other appliances. Dryer prices also rose about 12 percent, even though dryers were not subject to that tariff.

U.S. manufacturers and workers saw some benefit as production shifted to the United States. The researchers estimated the higher consumer prices cost $1.5 billion per year, or about $820,000 per new job. A gain in employment and a gain for the average shopper are different outcomes; by the researchers’ estimate, these jobs came at a steep price for shoppers.

New York Federal Reserve research explains that domestic producers can increase the amount they charge above their own costs when higher-priced imports create less competition. A shopper does not necessarily escape the price effect by choosing an American-made substitute.

CRS explains that tariff-related price increases can erode real income, reduce consumption and leave consumers with fewer choices. For a household, the practical issue is how much its money can buy, not just which company paid customs. A worker may benefit from protection in the industry that employs them while facing higher prices as a consumer.

Retaliation can turn exporters into losers

The U.S. Department of Agriculture (USDA) estimated that foreign retaliatory tariffs caused more than $27 billion in agricultural export losses from mid-2018 through the end of 2019. USDA estimated that China’s retaliation accounted for nearly $26 billion of those losses. The largest commodity losses were among producers of soybeans, sorghum and pork.

These exporters did not need to import a protected product to be hurt. They sold into markets whose governments raised barriers in response. A tariff’s effects can therefore arrive through a company’s customers as well as its suppliers.

The Government Accountability Office reported that USDA distributed about $14.4 billion in 2019 Market Facilitation Program payments to farming operations, aid USDA said was intended to offset the effects of trade disruptions. Aid changes who ultimately bears part of the loss; it does not make the original export loss disappear. The export-loss estimate and the aid total cover different periods and purposes, so subtracting one from the other would not establish how much damage was left unpaid.

More output in one industry does not guarantee more jobs overall

Federal Reserve researchers examined the 2018 tariffs through three channels: protection from imports, higher costs on imported production inputs and foreign retaliation against exports. They found the tariff increases were associated with declines in manufacturing employment in more exposed industries relative to less exposed ones, because input costs and retaliation outweighed a small positive effect from import protection. Their study found little evidence of a relationship between industrial production and the tariff channels it examined.

A newly protected factory is therefore not proof of a nationwide jobs gain; its benefit has to be weighed against the costs imposed on other employers. The employment finding describes the tariff episode studied, not a rule that every future tariff must have an identical result. Whether protection is worth its costs also depends on the value placed on industrial capacity or security, outcomes that the USITC study did not measure.

Jobs are not the only channel: a separate Federal Reserve analysis of U.S.-China tariff increases identifies machinery and equipment among imported goods used intensively for business investment. A tariff that raises the cost of buying equipment can leave a business with less to spend on expanding or replacing its production capacity. Another Federal Reserve analysis explains that persistent tariffs can slow the buildup of capital, meaning the equipment and buildings businesses use to produce goods, and shift resources toward less productive industries. Uncertainty can lead firms to delay investment and hiring. Those channels can weaken economy-wide output even when a protected industry grows; they describe possible effects, not a measurement of today’s national growth rate.

A smaller deficit takes more than taxing imports

The Federal Reserve Bank of Dallas ties the trade balance to national saving and investment. In its simplified example, a trade deficit arises when a country invests more than it saves, and the difference is financed from abroad. That connects the deficit to borrowing and spending decisions across the economy, not solely to the tax at the border.

A Federal Reserve trade model found that higher tariffs on China could shift U.S. import demand toward other countries. Buying less from one trading partner is therefore not the same as importing less overall: a tariff on one country can change where goods come from without changing the balance between saving and investment.

Cutting tariffs would not help everyone either. CRS describes benefits from international competition for consumers and businesses using imported inputs, alongside adjustment costs and dislocation for some workers and producers. The consumers gaining purchasing power and the producers losing protection are not necessarily the same people.

Why supporters and manufacturers can make different cases

In April 2025, President Donald Trump declared a national emergency over foreign trade practices and ordered tariffs in response, a policy the White House called reciprocal. The White House argued that the tariffs would bring manufacturing back to the United States, improve employment and growth, and rebalance trade relationships. It also argued that reliance on foreign producers creates vulnerability to geopolitical disruption and supply shocks. The security case places value on having production available at home, beyond the price of the next imported shipment.

Steel-industry organizations argue that strong, predictable Section 232 tariffs support continued investment, domestic production and good-paying jobs. Kevin Dempsey, president and CEO of the American Iron and Steel Institute, said in September 2026 that action was needed against what he described as subsidized steel destabilizing global markets. The institute describes government subsidies and other policies that distort competition as drivers of excess steel production.

The National Association of Manufacturers (NAM) warns that broad tariffs can disrupt supply chains, raise costs and weaken manufacturers’ global competitiveness. NAM argues that some critical manufacturing inputs must be imported because domestic production cannot meet all manufacturers’ needs, even at full capacity. For those manufacturers, taxing an imported input can increase the cost of making the finished product in America.

NAM advocates predictable access to materials and technologies to support long-term investment. It proposes duty-free licensing for inputs used in U.S. manufacturing. It also favors partnerships with allies and reduced tariff barriers on critical inputs while countering what it calls nonmarket distortions, such as export restrictions and unfair state-backed advantages. Both positions invoke American manufacturing, but they focus on different parts of its production chain. The practical policy choice includes which products to protect and which production costs to expose to the tax.

CRS describes tariffs as tools for protecting selected industries or gaining negotiating leverage, while trade agreements set tariff commitments and can reduce barriers. Raising an import tax changes the competitive price at the border; negotiating lower trade barriers seeks access to markets on agreed terms.

Who can change a tariff, and where to check the rate

Article I of the Constitution gives Congress authority over duties and foreign commerce. Congress has delegated some of its tariff powers to the president. Different statutes address different problems: Section 232 covers national-security threats, while Section 301 covers trade-agreement violations and certain other foreign trade practices. A president’s tariff announcement has to be matched to the authority used; the powers are not interchangeable.

In February 2026, the Supreme Court’s decision in Learning Resources, Inc. v. Trump invalidated the use of the International Emergency Economic Powers Act to impose tariffs. CBP stopped collecting the April 2025 reciprocal tariffs and the Canada, Mexico and China drug-trafficking tariffs imposed under IEEPA for goods entered for consumption, or withdrawn from warehouse for consumption, on or after February 24, 2026. That ruling limits a particular legal route, rather than abolishing the other tariff authorities Congress enacted.

CBP assesses tariffs using the Harmonized Tariff Schedule of the United States, which classifies merchandise and lists duty rates. Applicable rates can vary with a product’s country of origin, and some duties combine different kinds of charges. Check the current Harmonized Tariff Schedule and CBP trade-remedy guidance for a particular product, rather than treating a historical tariff example as its current bill.

A steelmaker’s increased production can be real, and so can the reduced production of a manufacturer buying its steel. Judging the policy means keeping both in view.