Who is paying for Trump's tariffs? Deutsche Bank: Americans
Deutsche Bank analysis reveals that the cost of Trump's tariffs is mainly borne by Americans: Although U.S. tariff revenue has exceeded $100 billion this year, foreign exporters have not significantly lowered prices to absorb costs. Instead, U.S. importers are bearing the majority of the tariff burden by compressing their own profit margins, which has temporarily suppressed consumer price increases, but inflationary pressures may intensify in the future. The bank stated that this situation will be bearish for the dollar
With the advancement of U.S. President Trump's tariff policy, a key question has emerged: who is ultimately paying for these tariffs?
According to news from the Chase Wind Trading Platform, Deutsche Bank's latest research report shows that the tariffs imposed by the Trump administration are primarily borne by Americans, rather than overseas exporters. The bank analyzed changes in the import prices of U.S. manufactured goods in the second quarter and found that, although tariff revenues have exceeded $100 billion this year, foreign exporters have not absorbed the tariff costs through significant price reductions.
Analyst George Saravelos pointed out that if foreign exporters were to bear the tariff costs, the market should theoretically see a substantial decrease in the prices of imported goods. However, the analysis indicates that among U.S. trading partners, only Canada has seen moderate price reductions and the UK has experienced minor adjustments, while exporters in other regions have paid negligible tariff costs. Most surprisingly, Chinese exporters have not significantly lowered prices to offset the impact of tariffs.
If foreigners were paying the tariffs, we would expect to see a significant drop in the prices of imported goods, as they would absorb the costs into their profit margins. Indeed, we have seen some moderate price declines, most notably in Canada, followed by the UK. But the most surprising thing is that, aside from that, exporters in other places seem to be paying very little.
Given that the increase in the U.S. Consumer Price Index has remained restrained so far, Deutsche Bank concludes that U.S. importers are primarily absorbing the tariff costs by compressing their own profit margins. This situation not only provides more negotiation leverage for U.S. trading partners ahead of the new deadline on August 1 but also signals potential upward pressure on U.S. consumer prices in the future.
For now, the top-down macro evidence seems quite clear: it is primarily Americans who are paying these tariffs. Given that the increase in the U.S. Consumer Price Index (CPI) has been restrained so far, it can be inferred that U.S. importers are mainly absorbing the tariff costs into their profit margins.
While this approach protects consumers in the short term, it poses ongoing pressure on the profitability of U.S. companies. As the tariff policy continues, whether this margin compression model can be sustained will become a key issue.
Deutsche Bank strategist George Saravelos also pointed out that the economic costs of tariffs are primarily borne by the U.S. rather than other parts of the world, which poses an additional negative impact on the dollar.
Therefore, we draw several conclusions. First, exporters in other parts of the world have not yet felt the pain brought by tariffs—this, in turn, provides more negotiation leverage for U.S. trading partners before the new deadline on August 1. Second, U.S. consumer prices may face greater pressure in the future. Third, given that the economic costs of tariffs seem to be primarily borne by the U.S. rather than other parts of the world, this constitutes an additional bearish factor for the dollar.
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