US consumers could bear half the cost of tariffs long-term: study

The European Central Bank just sent a warning across to US consumers: Right now, retailers are absorbing the lion’s share of tariff-induced cost increases, but eventually, the burden will shift to consumers.

New analysis from the bank’s Economic Bulletin found that in the long-term, as retailers lose their ability to take a financial hit in order to hold down prices, shoppers could bear over half of total cost increases, up from around a third currently.

• Meanwhile, foreign firms are bearing just 5% of the cost of tariffs, with the rest falling on US firms and consumers.

The latest round of retail earnings showed that retailers are still keen to avoid price increases regardless of what happens with tariffs.

“Price is the very last lever we want to pull because we know price matters to consumers on a budget,” Target CEO Michael Fiddelke told shareholders. “That’s the mindset we'll have for however the variables unfold this year.”

The ECB isn’t the only organization predicting that consumers will eventually have to pay the price for the Trump administration’s tariff policies. The nonpartisan Tax Foundation said tariffs amounted to an average tax increase of $1,000 per household in 2025, and predicted a $600 increase in 2026.

The Federal Reserve Bank of New York also found that 94% of tariff costs were borne by US importers in the first eight months of 2025, concluding that US firms and consumers continued to “bear the bulk of the economic burden.”

The reason for this distribution of costs, the bank explained, is that exporters are able to raise their prices in tandem with the tariff rate, in which case “there is 100% pass-through from tariffs to import prices, and therefore on US consumers and firms.”