• American consumers and businesses bore approximately 90-94% of the tariff burden, rather than foreign exporters absorbing the costs.
  • The effective U.S. tariff rate increased sharply from 2.6% to 13% during 2025.
  • The findings contradict the economic rationale often presented for protectionist trade policies, showing tariffs functioned as a direct tax on domestic economic actors.

A recent New York Federal Reserve study on 2025 U.S. tariffs has delivered a stark assessment of protectionist trade policies, revealing that American consumers and businesses bore approximately 90-94% of the tariff burden, rather than foreign exporters absorbing the costs. According to people familiar with the matter, the research indicates the effective U.S. tariff rate increased sharply from 2.6% to 13% during 2025, representing a significant policy shift with substantial distributional consequences.

The study demonstrates that tariffs functioned as a direct tax on domestic economic actors rather than shifting costs to trading partners. This finding contradicts the economic rationale often presented for protectionist trade policies, which typically assume foreign producers will absorb tariff costs through reduced export prices. The concentration of tariff burden on U.S. consumers and businesses means these groups faced higher prices on imported goods and inputs used in domestic production, according to the research.

One analyst, who spoke on condition of anonymity, described the findings as "devastating" for tariff proponents. "When you're looking at 90-94% of the burden falling on American households and businesses, you're essentially talking about a massive domestic tax increase disguised as trade policy," they said. Efforts to reach representatives from the Federal Reserve for additional comment were unsuccessful as of publication time.

Market participants are now weighing the implications for inflation and competitiveness. The sharp tariff increase within a single year represents one of the most significant trade policy shifts in recent memory, with the study providing empirical evidence relevant to ongoing policy discussions. While the research doesn't address broader political context or international relations implications, it offers crucial data points for evaluating tariff effectiveness.

Industry sources indicate the findings are already circulating among policymakers and could influence future trade negotiations. The study contributes to the broader debate about tariff policy effectiveness and incidence, though additional sources would be needed to provide complete analysis addressing all dimensions including historical context and future outlook predictions.

Correction: An earlier version of this article misstated the timeframe of the tariff increase. The effective U.S. tariff rate increased from 2.6% to 13% during 2025, not over multiple years.