Tariffs Get Absorbed by Corporate Profits, Not Paid by Consumers

President Donald Trump speaks during a campaign rally, Thursday, Sept. 20, 2018, in Las Vegas.
AP Photo/Evan Vucci

Although over a third of global corporations say they have experienced higher costs because of tariffs, less than 10 percent say they are raising prices on consumers, according to a CNBC survey released Friday.

Tariffs are taxes on imports. Although critics of the Trump administration’s tariffs have described them as taxes on consumers, there is very little evidence that consumer prices have risen due to tariffs. Instead, much of the cost of tariffs appears to have been absorbed by corporations using or selling imported goods.

Slashing the U.S. corporate tax rate has made it easier for companies to absorb the costs of the trade war, largely because the cuts caused after-tax profit margins to explode higher. The tariffs may eat into those gains but not enough to completely offset them.

The CNBC Global CFO Council includes the finance chiefs of some of the largest public and private companies in the world. Collectively they manage nearly $5 trillion in market value across a wide variety of sectors, according to CNBC.

CNBC Survey shows consumer prices are rising because of tariffs.

Thirty-seven and a half percent of the finance chiefs said their firm had experienced higher input costs. Under nine percent said their prices were up.

 

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