Who Pays the Tax on Imports from China? — Matthew Higgins, Thomas Klitgaard, and Michael Nattinger, FRBNY

Tariffs are a form of taxation. Indeed, before the 1920s, tariffs (or customs duties) were typically the largest source of funding for the U.S. government. Of little interest for decades, tariffs are again becoming relevant, given the substantial increase in the rates charged on imports from China. U.S. businesses and consumers are shielded from the higher tariffs to the extent that Chinese firms lower the dollar prices they charge. U.S. import price data, however, indicate that prices on goods from China have so far not fallen. As a result, U.S. wholesalers, retailers, manufacturers, and consumers are left paying the tax.

Liberty Street Economics — FRBNY
Who Pays the Tax on Imports from China?

Matthew Higgins, Thomas Klitgaard, and Michael Nattinger, FRBNY