Deutsche Bank says U.S. importers, not foreign exporters, are absorbing the costs

Despite generating over $100 billion in tariff revenue so far this year, it’s American importers—not foreign exporters—who are shouldering most of the cost from President Trump’s trade policies, according to analysts at Deutsche Bank (ETR:DBKGn).

In a recent research note, Deutsche Bank economists analyzed U.S. import price trends for manufactured goods during the second quarter, when the bulk of new tariffs were enacted.

“If foreigners were paying for the tariffs, we would expect to see a sharp reduction in the price of imported goods as they absorbed it into their own margins,” the analysts wrote.

Instead, the data reveal only “mild price reductions,” primarily from Canada and, to a lesser extent, the UK.

In the case of China—where average tariff rates jumped by more than 30%—the dollar price of imports declined by just 1%, the bank noted.

“To be sure, there are specific industry examples of a greater impact,” Deutsche Bank acknowledged. “For now, however, the top-down macro evidence seems clear: Americans are mostly paying for the tariffs.”

Because consumer price inflation has stayed relatively subdued, analysts suggest that U.S. importers are likely eating the additional costs themselves, squeezing profit margins rather than passing the expenses on to consumers.

Deutsche Bank drew three key conclusions from the data: First, foreign exporters “are not yet feeling much pain from the tariffs,” which may give them increased leverage ahead of the August 1 trade deadline.

Second, there may be “more pressure on U.S. consumer prices in the pipeline” as the longer-term effects begin to materialize.

Third, because the economic burden is falling disproportionately on the U.S., the situation represents “an added dollar negative” in the broader macroeconomic outlook.