The Incidence of Tariffs: Rates and Reality

In 2025, statutory tariff rates on U.S. imports rose to levels not seen in over one hundred years.What are the implications for prices?On the one hand, shipping lags, exemptions, and enforcement gaps have kept the actual implemented rates at only half of the statutory rates, moderating the tariffs' impact.On the other hand, tariff pass-through to U.S. import prices is almost 100 percent, so the United States is bearing a large share of the costs.We study the incidence of the 2018-2019 and 2025 U.S. tariffs and discuss implications for U.S. sourcing, domestic manufacturing costs, and the dollar.