Who Is Paying for the 2025 U.S. Tariffs?

U.S. average statutory tariffs rose from 2.6% to 13% over 2025, but average duties collected were lower due to exemptions and importers shifting away from high‑tariff suppliers; China’s share of U.S. imports fell to below 10% while Mexico and Vietnam gained share. Regression analysis on HTS10-country monthly data through November 2025 shows roughly 86–94% pass-through of tariffs to U.S. import prices across 2025 (rising exporter incidence late in the year), implying import prices for the average‑tariffed good rose about 11% (13% × 0.86), with nearly 90% of the economic burden borne by U.S. firms and consumers.

Analysis

Market structure: The 2025 tariff surge (average statutory 13%) produced ~86% pass-through into U.S. import prices by November — implying ~11% (~13 * 0.86) higher prices on tariffed goods versus non-tariffed peers. Direct losers: import-heavy retailers and consumer discretionary (electronics, apparel) facing margin squeeze and demand elasticity; winners: Mexican and Vietnamese exporters, nearshoring logistics and domestic producers with pricing power. China’s U.S. share collapsed from ~25% (2017) to <10% (2025), reallocating ~5–9pps to Mexico/Vietnam in 2025 alone.

Risk assessment: Tail risks include tariff escalation/retaliation that triggers stagflation (high-impact, <20% prob in 12 months), supply-chain shocks from abrupt re-export restrictions, or large exemption rollbacks. Near-term (days–weeks) volatility in ports, spot freight and importers’ inventory adjustments; short-term (months) margin resets and CPI blips; long-term (quarters–years) structural capex into Mexico/Vietnam and automation. Hidden dependencies: exemption policy volatility and corporate sourcing contracts (12–24 month lags) will mute immediate elasticities.

Trade & cross-asset implications: Higher import-driven CPI increases odds of tighter Fed policy -> upward pressure on nominal yields and steepening; favor short duration and TIPS hedges. FX: MXN likely to strengthen on export inflows vs CNY pressure; commodities for intermediate goods (copper, steel) see localized demand uplift nearshoring; freight/spot container rates remain idiosyncratic and volatile.

Contrarian angles: Consensus that U.S. consumers will permanently bear tariffs may be overdone—if foreign exporters cut margins further or firms fully offshore manufacturing capex accelerates, pass-through could fall below 50% over 12–24 months. Retail de-rating may overstate solvency risk; industrial automation and capex names could outperform as firms retool supply chains.

Key Decisions for Investors

• Establish a 2.0–3.0% portfolio long in EWW (iShares Mexico) and/or spot MXN exposure to play nearshoring gains; hold 6–12 months and add if Mexico export PMI outperforms U.S. PMIs by >0.5ppt over two months.
• Initiate a 1.5–2.5% short/hedge position vs U.S. retail: buy 2–3 month put spreads on XRT sized to 1.5% portfolio risk (buy 0–5% OTM puts, sell 10% OTM) to capture near-term margin shock; unwind or roll after two consecutive CPI prints that undershoot consensus by >0.2pp.
• Reduce portfolio duration by ~0.5 years: sell 10Y Treasury futures sized to a 2% portfolio risk budget (or buy short-term T-bill ETFs and trim long-duration holdings). If monthly CPI (ex-food-energy) surprises +0.3pp above consensus for two months, increase short-duration hedge to 5% of portfolio.
• Pair trade logistics/nearshoring beneficiary: go 1.5% long JBHT (J.B. Hunt) and 1.5% short FDX (FedEx) for 3–6 months to express overland Mexico routing gains vs international air/parcel exposure; trim if container freight index normalizes >20% from current levels.