Despite repeated claims from Donald Trump and his advisors that foreign countries are “paying the tariffs,” new data clearly shows the opposite. U.S. consumers and domestic companies are bearing nearly all of the costs — a hidden tax that is worsening inflation, eroding profits, and undermining economic growth.
According to an October 2025 analysis by Goldman Sachs, American consumers are now shouldering 55% of the total cost of Trump’s new import tariffs, while U.S. companies pay another 22%. In other words, more than three-quarters of the tariff burden is being paid by Americans — not by foreign exporters. Only a small portion is absorbed by overseas producers, debunking the administration’s long-standing assertion that tariffs are “paid for by China” or “funded by foreign governments.”
The economic mechanics behind this are straightforward but devastating. When tariffs are imposed, U.S. importers pay the added tax on goods entering the country. Those higher costs are then passed through the supply chain, eventually reaching consumers in the form of higher prices on everyday essentials — including food, automobiles, electronics, and household goods. The result is a direct contribution to inflation, disproportionately affecting low- and middle-income households.
Meanwhile, U.S. corporations are absorbing part of the impact to remain competitive, sacrificing profit margins and cutting back on investment, hiring, and wage growth. For small and mid-sized businesses dependent on imported components, these tariffs have become crippling — pushing many to the brink of insolvency in an already fragile economy.
Example of Corporate Failure
A recent casualty of these policies is First Brands Group, one of the largest aftermarket auto parts manufacturers in the world, which filed for Chapter 11 bankruptcy in September 2025. The collapse has caused billions in financial losses and raised alarm bells about the stability of the private credit market, already strained by manufacturing-sector exposure.
While the company faced several economic headwinds — including rising interest rates, supply chain disruptions, and slowing demand — tariffs played a decisive role. The Trump administration’s escalating import taxes on metals, components, and finished goods dramatically increased input costs across its supply chain. For a multinational firm operating on five continents and employing 26,000 people, the financial pressure became untenable.
Before filing, First Brands managed a well-known portfolio — Fram, Trico, and Raybestos among them — and generated approximately $5 billion in 2024 revenue. Yet as tariffs inflated raw material costs and credit tightened, the company could not sustain liquidity or refinance its mounting debt. Its bankruptcy represents not just a loss for the auto parts industry, but a warning sign of structural weakness spreading through U.S. manufacturing — the very sectors these tariffs were supposed to protect.
A Double Blow to the U.S. Economy
The outcome is a double blow to the American economy: consumers face rising prices while businesses struggle with shrinking margins. What was billed as a measure to “protect American industry” has instead functioned as an across-the-board tax hike on Americans.
Historically, tariffs are among the most regressive forms of taxation, hitting lower- and middle-income families hardest. As Trump’s trade wars expand, economists warn that the renewed wave of tariffs could reignite inflation, undermining recent progress in stabilizing prices.
Once again, protectionism is being sold as patriotism — and once again, it is American families and workers who are paying the price.