Americans Are Paying For 96% of Trump’s Tariffs, Study Finds

A Kiel Institute study of $4 trillion of shipments from January 2024–November 2025 finds foreign exporters absorb only about 4% of President Trump’s tariff burden, with 96% passed to U.S. importers and consumers; researchers conclude the roughly $200 billion increase in U.S. customs revenue in 2025 was “a tax paid almost entirely by Americans.” The Trump administration’s April 2, 2025 tariff program established a baseline 10% on almost all imports plus higher country- and sector-specific levies (autos, steel, aluminum), and new announced tariffs on several European countries (10% from Feb 1, 2026 rising to 25% on June 1) raise further downside risk for consumer prices, corporate margins, and trade volumes. The Supreme Court’s upcoming ruling on the legality of the tariffs, after two lower courts found overreach under IEEPA, creates material legal and policy uncertainty for affected sectors and global supply chains.

Analysis

Market structure: Tariffs that are ~96% passed to U.S. buyers shift pricing power to domestic producers in protected sectors (steel, aluminum, autos) while compressing margins at import-dependent retailers and brands. Expect domestic steel/aluminum producers to see volume stability and 5-15% price uplifts in the near term versus pre-tariff levels, while discretionary importers face SKU cuts and higher consumer pricing sensitivity. Net effect: tighter imported supply, upward pressure on CPI components tied to goods, and inventory destocking in apparel/electronics over 1–4 quarters.

Risk assessment: Key tail risks are (1) Supreme Court invalidation of tariffs within weeks (rapid rollback, -15–40% rerate for beneficiary names), (2) EU/partner retaliation triggering broad export shocks, and (3) demand destruction if consumer real wages fall >1–2% sustained. Short-term (days–months) volatility will cluster around legal/court and June 1 tariff escalator; long-term (quarters) risks include supply-chain reshoring capex and durable inflation-driven Fed tightening. Hidden dependency: domestic manufacturers relying on imported intermediate goods may be losers despite headline domestic protection.

Trade implications: Prefer selective long exposure to U.S. steelmakers with domestic-focused sales and limited alloy import exposure and short selective import-heavy apparel/retail names that cannot fully pass costs to consumers. Use options to size asymmetric exposure around two catalysts—Supreme Court decision (next 2–6 weeks) and the June 1 EU tariff step-up—to limit downside. Rebalance into TIPS and short-duration Treasuries if tariffs persist beyond one quarter.

Contrarian angles: Consensus focuses on winners in protected industries but underestimates demand elasticity—sustained consumer pushback could move losses from retailers back onto producers via volume declines. The market may have overpriced tariff permanence; a court victory or negotiated roll-back would create fast mean reversion, especially in names already up 20–50% on tariff hopes. Historical parallel: 2002 steel tariffs briefly helped domestic names but were followed by rapid margin normalization once global channels adjusted.

Key Decisions for Investors

• Establish a 2–3% long position in Nucor (NUE) and Steel Dynamics (STLD) split equally; target 20–35% upside over 3–9 months if tariffs remain, set stop-loss at -12% and trim to half on any Supreme Court ruling against tariffs within 30 days.
• Initiate a 1–2% short position in import-heavy apparel/discount retailers: PVH (PVH) and Target (TGT) as a pair (short PVH 60%, short TGT 40% of the allocation); expect 10–25% downside over 3–6 months if pass-through to consumers persists. Cover/flip if same-store-sales outperformance >3% on tariff relief.
• Buy protective inflations insurance: increase TIPS ETF (TIP) allocation by 1–2% and reduce nominal duration exposure (cut long-duration Treasury ETFs by 1–2%) to hedge 6–18 month inflation risk if tariffs persist past June 1.
• Use options for asymmetric exposure: buy June–Sep 2026 call spread on NUE (buy 1 ATM, sell 1.5x OTM) sized at 0.5–1% notional to capture upside while capping premium; buy 3–6 month OTM puts on PVH/TGT (0.5% notional) to hedge earnings downside around the June tariff step-up.
• Trigger-based monitoring: If Supreme Court rules tariffs unlawful or President announces rollback/negotiation within 6 weeks, close shorts in PVH/TGT and cut NUE/STLD longs by 50% within 48 hours; if June 1 tariff increases to 25% proceed to add another 1% to NUE/STLD longs and widen short positions in import-reliant retail by 0.5–1%.