That’s public finance and Heritage Chief Economist EJ Antoni. CBO (and just about everybody else):
Higher tariffs directly increase the cost of imported goods, raising prices for U.S. consumers and businesses. Because many imports are used as inputs in domestic production, higher tariffs also indirectly raise the costs of goods and services produced domestically using imports. In CBO’s assessment, foreign exporters will absorb 5 percent of the cost of the tariffs, slightly offsetting the import price increases faced by U.S. importers. In the near term, CBO anticipates, U.S. businesses will absorb 30 percent of the import price increases by reducing their profit margins; the remaining 70 percent will be passed through to consumers by raising prices. In addition, U.S. businesses that produce goods that compete with foreign imports will, in CBO’s assessment, increase their prices because of the decline in competition from abroad and the increased demand for tariff-free domestic goods. Those price increases are estimated to fully offset the 30 percent of price increases absorbed by U.S. businesses that import goods, so the net effect of tariffs is to raise U.S. consumer prices by the full portion of the cost of the tariffs borne domestically (95 percent).2 In CBO’s projections, the new tariffs increase the price index for personal consumption expenditures by about 0.8 percentage points at the end of 2026 but have negligible additional effects in 2027 and beyond.
This assertion that foreign producers shoulder most of the tax burden relies upon a “large country” assumption. This is an empirical question in the economic context (is the US a large player in international trade in steel, for instance).
For recent empirical evidence (instead of handwaving by Antoni) see also Gopinath & Neiman (2026).
