Get audio access with any FP subscription. Subscribe Now ALREADY AN FP SUBSCRIBER? LOGIN

Get audio access with any FP subscription.

ALREADY AN FP SUBSCRIBER? LOGIN

Ongoing reports and analysis

All eyes are set on U.S. President Donald Trump’s escalating war against Iran, but on the home front, things are not going well. Nearly one year after he launched a barrage of steep tariffs on what he called “Liberation Day,” economists have crunched the numbers for 2025—and they are not looking good for the White House. By Trump’s own yardstick—his three goals of making foreigners pay for doing business with the United States, narrowing the U.S. trade deficit, and punishing China—tariffs have clearly failed.

Start with the question of who pays whom. While Trump’s claim that foreigners pay the tariff is obviously false—a tariff is a government tax levied on U.S. importers of foreign goods—the more relevant question is who ends up absorbing the economic cost. Do importers pass their tariff costs on to U.S. households by raising prices? Do importers keep prices steady and let the tariff eat into their profits? Do foreign exporters lower their prices to stay competitive? Or is it a combination, perhaps of all three?

All eyes are set on U.S. President Donald Trump’s escalating war against Iran, but on the home front, things are not going well. Nearly one year after he launched a barrage of steep tariffs on what he called “Liberation Day,” economists have crunched the numbers for 2025—and they are not looking good for the White House. By Trump’s own yardstick—his three goals of making foreigners pay for doing business with the United States, narrowing the U.S. trade deficit, and punishing China—tariffs have clearly failed.

Start with the question of who pays whom. While Trump’s claim that foreigners pay the tariff is obviously false—a tariff is a government tax levied on U.S. importers of foreign goods—the more relevant question is who ends up absorbing the economic cost. Do importers pass their tariff costs on to U.S. households by raising........

© Foreign Policy