"But on the ground, he warns, the consequences of President Donald Trump's renewed tariff wars are showing up in ways that will hit regular Americans the hardest. "We haven't seen tariffs at these kinds of levels in the United States for many decades," he told Fortune while en route to Zurich. "And so an implication of that is that we're learning about how tariffs affect the economy in real time.""
"Sheets, who also served in former President Barack Obama's administration as the U.S. Treasury's top economic diplomat, estimates that U.S. consumers are currently bearing about 30% to 40% of tariff costs-but that number is poised to rise to around 60% as companies run out of room to absorb higher import prices. "Firms can only absorb so much," he said. "They'll need to push more through to the consumer.""
Tariffs have reached levels not seen in the United States for many decades, altering price dynamics across the economy. U.S. consumers are currently shouldering roughly 30% to 40% of tariff costs, with that share likely rising to around 60% as firms exhaust their ability to absorb higher import prices. Firms have absorbed much of the initial hit, effectively functioning like a tax on capital. Evidence of pass-through appears unevenly across goods: audio equipment up about 15%, furniture and bedding nearly 7%, and tools and hardware around 4%. Imported household goods, rather than groceries, show the clearest price effects. Retailers are likely to time price increases during major pricing windows such as the holiday season and the new year.
Read at Fortune
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