US companies and consumers are paying for tariffs. Piper Sandler shared an excellent piece of research which shed light on a key macro question: who is paying for US tariffs so far?
The US has been collecting tariffs at an increased pace over the last few weeks, with the annualized pace looking like $400bn+ in duties collected.
That’s a big number which is helping to optically reduce deficits, but the real question is: who is paying for tariffs?
The simple equation to think about this problem is:
- Tariffs = US import prices + US margins + US customer prices
- If import prices are falling, exporters are paying for tariffs.
- If US companies’ margins are falling, US companies are paying.
If goods prices are increasing, US consumers are paying.
Piper Sandler found that so far:
1. Exporters are absorbing tariffs up to only 10-15%
2. Consumers are absorbing tariffs for 25-30%
3. US companies are bearing the brunt with ~60% of tariffs-led price increases being absorbed and hence hitting their margins
Who do you think will end up paying for tariffs when the dust settles?
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