A recent study published by the Federal Reserve Bank of Boston has shed light on who ultimately pays the price when the US levies tariffs on imported goods. According to the study, consumers are the ones who end up bearing the brunt of higher costs associated with imported goods. Researchers surveyed small- and medium-sized businesses and found that these firms planned to pass along the increased costs of tariffs to their customers by raising prices. Importers surveyed in the study expected the cost increases to be fully reflected in prices within about two years, with the extent of price increases varying depending on the specific tariff scenario.
Capital Economics has calculated the current effective tariff rate on US imports to be 22%, after factoring in some exemptions on tech products. However, last week the effective rate hit 27%, reaching the highest level in over a century. This increase in tariffs is expected to impact consumers directly, as businesses pass on the added costs of importing goods. With the current trade landscape remaining uncertain, it is important for consumers to be aware of how tariffs on imported goods can ultimately affect their wallets. This study highlights the need for businesses and policymakers to consider the broader implications of tariffs on the economy and consumers.
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