Mumbai: The Congressional Budget Office has said that US consumers bear 95 percent of the cost of the tariffs imposed in 2025, according to its latest budget and economic outlook. Reacting to the report, Brendan Duke, a tax and budget expert at the Center on Budget and Policy Priorities and former BidenHarris National Economic Council official, wrote on X: “Wow. CBO estimates that U.S. consumers bear 95 PERCENT OF THE TRUMP TARIFFS.”
He added: “Basically, foreign firms bear 5% of them, U.S. companies bear 30% of them but other U.S. companies get to raise prices on consumers from less competition so that nets to zero. And consumers pay rest.” In its report, the Congressional Budget Office said that during 2025, the United States increased tariffs on most imported goods, including consumer products and intermediate inputs used in manufacturing. As of November 2025, the effective tariff rate was about 13 percentage points higher than the roughly 2 percent rate on imports in 2024.
The CBO said its projections assume that current US tariff policies implemented through executive action, in place as of November 20, 2025, will remain throughout the projection period. The report said tariffs raise the cost of imported machinery, components and materials, dampening real investment. While some investment may be offset by businesses relocating production to the United States, reallocating resources to produce goods previously imported lowers efficiency and reduces output.
The agency said the higher and frequently changing tariffs are expected to temporarily raise inflation, reduce real investment, lower real gross domestic product, and reduce employment compared with what would have happened without the changes in trade policy. It said foreign exporters will absorb 5 percent of the cost of the tariffs, slightly offsetting price increases faced by U.S. importers. In the near term, U.S. businesses are expected to absorb 30 percent of the import price increases by reducing profit margins, while the remaining 70 percent will be passed through to consumers.
However, the CBO added that US businesses that compete with foreign imports are expected to increase their prices because of reduced competition and higher demand for domestic goods. Those price increases are estimated to fully offset the 30 per cent absorbed by importing firms, meaning the net effect is that U.S. consumer prices rise by the full domestically borne portion of the tariffs (95 percent).
The CBO also expects US trading partners to introduce additional tariff and non-tariff measures on US exports in response. It said such measures could take the form of export restraints, regulatory barriers, port fees, boycotts or industrial policies supporting domestic industries. Canada’s additional 25 percent tariffs on U.S. exports of steel, aluminum and automobiles remained in place as of November 20, it noted.
