Your Questions About Tariffs, Answered

Section 301 requires an investigation into the objectionable trade practice before a tariff can be applied; the Trump Administration has initiated a number of these. The other avenues carry some limitations, but these could be sustained with the support of Congress. And product- or sector-specific protections, justified as matters of national security, are out of the scope of this challenge. So while the specific expression of tariffs may change if the courts rule against the Administration, their impact is unlikely to diminish.

2. Who is bearing the burden of tariffs?

When asked this question during client meetings, I often invite those assembled to take out their phones, flip the camera into selfie mode, and regard the image on their screens. Ultimately, we will all end up paying.

To date, however, tariffs haven't made a substantial impression on prices. There are several reasons for this: some of the more significant levies only went into force on August 1, and companies had been preparing for their arrival by stockpiling inventories from overseas. These elements serve to defer the consequences.

Analysis published by Goldman Sachs found that American importers are absorbing the lion's share of tariff costs to date. Their behavior may be motivated by a desire to sustain market share, or a hesitance to pass along costs of tariffs which may yet change. But past tariff episodes suggest that this forbearance is only temporary, and consumers eventually inherit most of the burden.