Americans Likely Bearing the Brunt of Tariffs, Analysts Suggest
New analysis indicates that American consumers are primarily footing the bill for recently imposed tariffs, despite initial expectations that exporters would absorb the costs. While the U.S.has collected approximately $100 billion in customs duties this year, import prices have remained stable through June, suggesting that foreign companies have not significantly reduced their prices to offset the tariffs.
Deutsche Bank analyst George Saravelos stated in a recent note that “the top-down macroevidence seems clear: Americans are mostly paying for the tariffs.” He further posited that the modest inflation levels observed in the Consumer Price Index suggest that American importers are absorbing the tariffs into their profit margins. This phenomenon is exemplified by major automakers like Stellantis and GM, which have absorbed billions in tariff-related costs.
The automotive sector is no exception to this trend. Daniel Roeska, a senior analyst at Bernstein, noted that auto companies are nearing the limit of their ability to absorb tariff costs into their own profit margins, with car prices expected to rise significantly later this year. “There are only two people who can pay for [tariffs]: either the shareholders or the consumer,” Roeska told Fortune.”And thereS going to be some sharing between those two halves. And so our view has been and continues to be that prices for cars are going to push up in the second half.”
Evidence suggests that American consumers will soon feel the impact of these tariffs. Automakers are beginning to scale back discounts and incentives previously offered to boost sales. Ford Motors, for instance, has shifted away from its employee discount plan, now offering prospective buyers a $0 down payment with 0% interest financing. While GM’s strategy to relocate some manufacturing to the U.S. aims to mitigate tariff and transport costs, it will also lead to higher labor expenses. Roeska acknowledged this as a sound strategic move but highlighted that companies face trade-offs in managing the inevitable consequences of tariffs. “There’s not much you can do,” Roeska commented.”If the policy is to put tariffs on cars, then that will increase the cost of cars, and ultimately, that will likely increase the price of cars.”
