The Blubber

While President Trump insists that foreign exporters will bear the brunt of U.S. tariffs, recent data suggests the opposite — American consumers are poised to shoulder much of the burden as companies adjust pricing to offset rising import costs.

A new survey from the Federal Reserve Bank of Dallas and economist Torsten Sløk at Apollo Global Management reveals that 76% of manufacturers in Texas plan to pass those added costs directly onto customers. Half said they will try to absorb some of the costs internally. Major retailers have also cautioned that the latest wave of tariffs on imports is likely to raise prices across a broad range of products.

“In the next six months, expect inflation to climb,” Sløk warned in a recent post.

Because companies must plan pricing strategies well in advance, many are already factoring in the extra costs. According to an EY survey of more than 4,000 executives, about two-thirds said they are preparing to pass tariffs along to consumers.

The Center for American Progress points out that low- and middle-income families will be hit hardest. The think tank estimates tariffs could add roughly $5,200 annually to household expenses.

Manufacturers anticipate their prices will rise 3.6% over the next year, up from a 2.3% estimate late last year, reflecting growing anxiety about trade policies, according to the National Association of Manufacturers.

"Tariff costs get passed down the chain,” said David Loftus, head of the Electronic Component Industry Association. “From manufacturers to distributors to end consumers — nobody has enough margin to just absorb it.”

A Gallup poll supports that outlook: nearly 90% of Americans now expect higher prices as a direct result of tariffs. While inflation remains moderate for now — the Consumer Price Index rose 2.4% in March, down from 2.8% in February — economists predict the pressure will build.

“With tariffs now fully implemented, we expect inflation to tick up, putting additional strain on already slowing consumer demand and overall economic growth,” said Daniel Vielhaber, economist at Nationwide.

Goldman Sachs forecasts that core inflation, measured by the personal consumption expenditures (PCE) index, will climb to 3.8% this year, up from 2.6% in March. Electronics and clothing are likely to be hit the hardest.

Tariffs, effectively taxes on imports, are paid by U.S. importers when goods enter the country. Economists broadly agree that these costs are rarely absorbed at the corporate level — instead, they’re typically passed on to American shoppers.

Despite this, President Trump has remained firm in his belief that tariffs are beneficial to the U.S. economy. In a recent NBC interview, he rejected the idea that tariffs will increase prices, saying, “I think tariffs are going to be great for us because it’s going to make us rich.”

He has repeatedly claimed that China will absorb the tariff costs, though in an April Cabinet meeting he hinted at some price increases. “Maybe the kids won’t have 30 dolls — maybe just two,” he said. “And maybe those two dolls will cost a couple dollars more.”