Georgina Boos, Bloomberg News
Who is paying for Donald Trump’s tariffs? So far, American businesses and consumers.
General Motors Co., the latest US company to disclose how taxes are increasing costs, said the automaker on Tuesday that its job choice to absorb the blow, causing profits to more than $1 billion. This helps explain why car prices didn’t rise in last week’s inflation data, but robust price increases for other commonly imported goods, such as toys and appliances, show that these tariff costs are being passed on to consumers.
Meanwhile, import prices excluding fuel rose in June, suggesting that foreign companies are not responsible for the burden of providing low prices to US companies. Trump repeated the characterization on Tuesday after meeting with his counterparts in the Philippines, saying the country will “pay 19% tariffs” in a social media post.
Tariffs have significantly increased revenue in the US, but data shows that these sources are filled domestically.
“The top-down macro evidence seems clear. Americans pay primarily for tariffs,” George Saravelos, global head of FX research at Deutsche Bank AG, said in a memo on Tuesday. “There could be more pressure on US consumer prices in the pipeline.”
Many economists have emphasized that businesses are hesitating to pass tariffs on customers, particularly as a relatively tame measurement of this year’s consumer price index. This is also evident in the producer price index, which has seen a sharp slowdown in the rate of growth in wholesalers and retailers’ margin measures in recent months.
“With little relaxation of import prices, domestic businesses are pissed off by the cost of increasing tariffs and are beginning to hand it over to consumers,” Wells Fargo & Company economists Sarah House and Nicole Selvie said in a memo last week. “Recent increases in import prices have generally pointed to foreign suppliers who resist price reductions.”
Certainly there are some indications that foreign suppliers are absorbing some of the impact as they continue to supply Japan’s US export prices, and in June, data dating back to 2016 will cut prices to the US.
But for many foreign companies, according to Wells Fargo, the US dollar slide encouraged them to raise the price of their bills. And Saravelos of Deutsche Bank said so far the pressure on US companies to pay tariff costs is another greenback headwind, already at its worst start since the 1970s.
Forecasters doubt that American companies will sacrifice profits much longer. 3M Co. raised its revenue outlook last week as production and pricing changes will help reduce the impact of tariffs. Nike Inc. is planning to raise “surgical” prices that will help ease the blow as it expects taxes to increase costs by about $1 billion.
“If consumers and foreign companies are not paying tariff costs, domestic companies are. That should ultimately be reflected in the announcement of corporate revenue,” Andrew Hollenhorst, chief US economist at Citigroup Inc., said in a memo on Tuesday. “We listen to this quarter, and companies may still highlight uncertainty and hope that (probably) share of burdens may change in the coming months.”
(With the support of Katherine Larkin and Carter Johnson.)
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Original issue: July 23, 2025, 12:29pm EDT
