Chart of the week: who is paying?

Data-driven insights and analysis from our investment team every week.

For a while now, we’ve been watching how higher tariffs in the US might affect the economy and inflation. Since March, the US government has collected nearly $150 billion in tariff revenue. But the big question is: who is paying these tariffs?

To explore this, we looked at two key price indicators. One tracks the cost of imported goods into the US, and the other shows consumer prices (excluding food and fuel).  If foreign exporters were absorbing the tariffs, we would expect to see a drop in import prices. As you can see in the blue line below, this has not happened. If US consumers were footing the bill, we would expect a noticeable rise in consumer prices, which means we should be seeing a spike upwards in the grey line below. This has not happened either.

So, could US companies be quietly paying the tariffs themselves? Possibly. But during the current earnings season, we haven’t seen signs of pressure on corporate profit margins, which makes that theory less convincing.

One explanation could be that businesses are still selling goods they imported before the tariffs kicked in – meaning the real impact is just delayed. But that stock won’t last forever, and eventually, the effects of these tariffs will have to show up somewhere.