Key Points

  • A report from the Kiel Institute shows that U.S. importers and consumers have borne 96% of the costs of tariffs imposed since April, directly contradicting the Trump administration's claim that foreigners, not American citizens, bear the burden of import duties.
  • The so-called "Liberation Day" tariffs in 2025 generated approximately $200 billion in revenue, but according to the German think tank, only 4% of import tax revenue came from outside the United States. Tariffs act like consumption taxes on imported goods, reducing the variety and quantity of goods available to consumers.
  • "The claim that foreigners pay these tariffs is a myth," Julian Hinz, research director at the Kiel Institute, said in a statement on Monday. The institute noted that in the long run, import duties will erode U.S. corporate profits while pushing up consumer prices.

In-Depth Analysis

U.S. President Donald Trump plans to meet with European leaders this week at the World Economic Forum in Davos, Switzerland, to discuss his threat to impose 10% tariffs on goods from eight NATO member countries. The threat takes effect on February 1, provided Denmark does not sell Greenland to the United States. Without an agreement, import duties would rise to 25% in June.

Asked at a press conference on Tuesday whether annexing Greenland would lead to the dissolution of NATO, Trump said: "I think something is going to happen that will be good for everybody." He told reporters at the White House: "I think we'll reach an agreement that will make NATO very happy and make us very happy." Referring to Greenland, Trump said: "We need it for national security reasons, even world security reasons."

The Yale Budget Lab said on Monday that the additional tariffs stemming from the Greenland dispute would raise the tariff rate faced by U.S. consumers from 16.9% to 17.5%, the highest level since 1932. The lab noted that prices would rise by 1.3% in the short term, costing the average U.S. household $1,751, and emphasized that the "Greenland tariffs" would have the most significant impact on pushing up prices for computers and heavy machinery.

The Yale Budget Lab also projects that by the end of 2026, the Greenland tariffs and existing import duties will raise the unemployment rate by 0.7 percentage points. Whether or not these threatened tariffs are implemented, import duties will slow GDP growth this year by 0.4 percentage points.

The Kiel Institute analyzed shipment-level data covering more than 25 million transactions worth over $4 trillion in its research. Analysis of the damage from tariffs on trade with Brazil and India shows that trade volumes plummeted, but export prices did not fall.

"Consumers are the ultimate bearers of the burden," the Kiel Institute said. It added: "Whether through higher prices for imported goods, higher prices for domestic goods using imported inputs, or a reduction in the availability and variety of goods, American households are paying for the tariffs."