While President Donald Trump’s focus on tariffs has dominated headlines since his return to office in January 2025, the true impact of these trade barriers is beginning to trickle down to American consumers. While Trump maintains that foreign countries bear the brunt of tariff costs, the reality is more complex. The burden ultimately falls on both American companies and consumers.
Although consumers haven’t yet felt the full force of tariffs, they are already paying a hidden price. According to Yale University’s Budget Lab, the average tax on U.S. importers has surged to nearly 18%, skyrocketing from a mere 2.4% in January. Harvard Business School estimates that Americans are now shelling out roughly 5% more for imported goods due to these tariffs.
So how are US companies trying to shield consumers from this escalating cost?
Strategic Stockpiling and Absorbing the Blow
Many businesses anticipated Trump’s aggressive stance on tariffs and strategically stockpiled inventory in the lead-up to their implementation. This move allowed them to temporarily buffer the impact, delaying the price hikes for consumers while hoping for a swift resolution to the trade war.
John Lash, group vice president of product strategy at e2open, a supply chain software platform, explains: “Early on, companies pre-positioned inventory to get ahead of tariffs and isolate consumers in hopes that the trade war would end before stocks ran out. That gave some short-term protection.” However, as these initial stockpiles dwindle, American businesses face a pressing dilemma – rising input costs with no easy solution.
The choices are complex: pass increased tariff costs onto consumers, potentially sparking price shocks and hurting demand; absorb the additional taxes themselves, risking squeezed profit margins; or pressure suppliers to share the burden.
According to Lash, “For the largest of buyers, such as the Walmarts and Amazons of the world, suppliers are asked to share some of the pain.” This means that shoppers at these retail giants might see minimal price increases, for now. Smaller firms, lacking the same bargaining power, may struggle with this balancing act and could be forced to either pass on increased costs or absorb them themselves – both scenarios ultimately harming their bottom line.
A Temporary Truce: The Inevitable Catch-Up
While these strategies provide a temporary reprieve for consumers, they can only delay the inevitable. As tariffs continue to weave through global supply chains and initial stockpiles dwindle, American shoppers are likely to face noticeable price increases in 2026 and beyond. Lash warns: “As the full impact of tariffs works its way through the supply chain, the net result is clear: consumers will pay more for goods and businesses’ profits will erode.”
He acknowledges that consumer spending has remained surprisingly resilient, and the stock market continues to thrive despite economic uncertainties. However, Lash cautions that the added pressure from tariffs could test this resilience. The long-term consequences of these trade policies remain unclear, but it’s becoming increasingly evident that no one escapes unscathed in the escalating tariff war.
