The implementation of tariffs under the International Emergency Economic Powers Act (IEEPA) in 2025 introduced a broad and complex set of trade measures affecting more than 200 countries and multiple industries.1 These tariffs, enacted as part of a rapid-response policy framework, have influenced import costs and supply chain dynamics. In February 2026, the U.S. Supreme Court held that IEEPA does not authorize the President to impose tariffs, invalidating the underlying programs and prompting a refund process for duties collected during the affected period.2

As refunds are administered to importers of record, attention has turned to a related but distinct question: which market participants actually bore the economic burden of these tariffs while they were in effect, and how should that burden, and any associated recoveries, be evaluated and allocated across the supply chain?

In economic terms, tariffs act as a tax on imported goods, raising prices, reducing trade volumes, and reallocating production and consumption across sectors. Although tariffs are applied at the point of import in the United States, their economic effects can extend across both importing and exporting countries. The relative impact on foreign producers and U.S. buyers is shaped by how prices and margins respond and how those responses cascade through downstream markets.

Understanding these cross-border adjustments, commonly referred to as tariff incidence,3 requires a framework that incorporates trade data and pricing behavior between exporting and importing markets. Understanding these market-specific dynamics is essential to determining who ultimately bore the economic cost, particularly in matters involving cost recovery, refunds, or the allocation of tariff-related restitution among supply chain participants.

The Misconception: Tariffs as a Direct Cost Increase

Tariffs are often interpreted as a straightforward increase in the cost of imported goods. While importers are responsible for paying duties at the border,4 this view may not fully capture how markets respond to tariff changes.

In practice, tariff-related cost increases may be reflected through a combination of adjustments, including changes in export prices, shifts in importer margins, and variations in purchaser pricing. The extent and timing of these adjustments can vary by industry, product, and market conditions.

As a result, the entity responsible for paying the tariff may not be the same as the entity that ultimately absorbs its economic cost.

Overview of IEEPA Tariffs

IEEPA tariffs differ from traditional trade measures in both their scope and implementation. Enabled by national emergency authorities, they allow for the rapid introduction of trade restrictions in response to evolving geopolitical and economic conditions.

The 2025 tariff framework includes multiple components:

  • Fentanyl-related tariffs applied to specific countries, including China, Canada, and Mexico5,6
  • Broad reciprocal tariffs applied across more than 80 countries7
  • The potential for overlapping or “stacked” tariffs

IEEPA tariff rates were applied as a percentage of import value, “ad valorem,” and may vary over time due to policy changes and trade negotiations. In some cases, rates fluctuated significantly. For example, China experienced 10% IEEPA tariffs in February 2025, 20% IEEPA tariffs in March 2025, and 30% IEEPA tariffs from April through the end of 2025.8,9

On February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that IEEPA does not authorize the President to impose tariffs, invalidating the reciprocal and trafficking-related tariff programs and opening the door to refunds for importers that paid duties under these programs. While the Court did not directly address how refunds should be administered, the U.S. Court of International Trade has since directed Customs and Border Protection to process refunds to importers of record, and U.S. Customs and Border Protection has begun implementing a phased refund process.10 Because refunds are paid to the importer of record, questions have arisen across multiple contexts regarding how the original economic burden of the IEEPA tariffs was distributed across the supply chain.

Tariff Incidence and the Role of Elasticity

Tariff incidence reflects how the economic burden of tariffs is distributed across participants in different countries. In the context of IEEPA tariffs, this involves interactions between:

  • Exporting countries, where producers set prices for goods entering the U.S.
  • Importing markets (U.S.), where firms purchase, distribute, and sell those goods
  • End consumers and downstream supply chain participants, where demand conditions influence how price changes are realized11

A central factor shaping these interactions is relative price elasticity across the two sides of the market.

  • Exporter-side elasticity (supply conditions) influences how foreign producers adjust prices in response to reduced demand or increased trade costs
  • Importer-side elasticity (demand conditions) influences how U.S. buyers respond to higher effective prices

When different parts of the supply chain have more or fewer alternatives, the cost of a tariff does not fall evenly. If buyers have limited options for where to source goods, they may be forced to absorb a larger share of the cost. But when alternatives are available, they may be able to shift purchases or negotiate lower prices, pushing more of the burden on suppliers. As a result, tariffs can set off a process of adjustment and negotiation, where prices and trade flows may reflect who has flexibility and who does not. In other words, tariffs do not always simply raise prices; they can redistribute costs based on who has the ability to adapt.

The same analytical framework used to identify how tariff costs are distributed during implementation can be applied to assess how recovered duties should be allocated. The central inquiry remains the same: which market participants bore the economic cost, and to what degree?12

Framework for Identification of Tariff Burden

Stout has evaluated the impact of IEEPA tariffs using import data from the U.S. International Trade Commission DataWeb.13 This dataset provides product-level information by country of origin, including customs values (import price less freight and insurance), import quantities, and calculated duties, allowing for a granular view of trade flows. We have leveraged this data to evaluate relevant markets with a focus on sectors and countries with meaningful exposure to IEEPA tariffs.

Incorporating the relevant IEEPA tariff programs over the appropriate time periods and considering changes in tariff rates over time, we can estimate tariff exposure by product type, which reflects an estimate of the total commerce affected by IEEPA tariffs in the relevant industry. Because this analysis relies on observable, third-party trade data, it provides a transparent and reproducible foundation that can be applied across a range of analytical contexts.

After the identification of industry exposure, we assessed tariff incidence on domestic market participants (U.S. firms, supply chain participants, and end consumers) by comparing changes in customs values and calculated duties. Customs values capture transaction prices between foreign exporters and U.S. importers, while calculated duties reflect the tariff component applied at the border. Examining these measures together provides insight into how pricing evolves at the exporter–importer interface following tariff implementation.

We further extend analyses by incorporating additional pricing indicators to distinguish how tariff burdens are shared between U.S. firms, supply chain participants, and consumers. By comparing import-side measures (customs values and duties) with domestic producer and consumer prices while incorporating information regarding product elasticities, we evaluate whether tariff-related cost changes are absorbed by importing firms or passed through to downstream buyers. Differences between import and domestic pricing provide insight into the degree of pass-through and the relative burden of tariffs across market participants.

Overall, our approach combines an assessment of tariff exposure with an evaluation of pricing dynamics across the supply chain to determine who ultimately bears the burden of IEEPA tariffs. This analysis provides insight into the extent to which tariffs are absorbed by U.S. firms versus passed through to end consumers or down the supply chain, highlighting variation in pass-through across products and markets. The results inform a clearer understanding of how tariffs affect pricing behavior, cost allocation, and competitive dynamics within the relevant industry. Each step of the analysis is grounded in publicly available trade and pricing data, supporting transparent conclusions about how tariff-related costs are distributed across the supply chain.

Case Study: Application to U.S. T-Shirt Imports from China

Stout evaluated U.S. imports of T-shirts, a well-defined product category with significant reliance on global sourcing. Using U.S. International Trade Commission DataWeb, we analyzed product-level imports from China and applied relevant IEEPA tariff programs over the period of interest to assess how tariff exposure is reflected in trade data.

We compared changes in customs values and calculated duties to assess how tariff-related cost changes are reflected between Chinese exporters and U.S. importers. The observed data show that duties increased following the implementation of tariffs, while customs values declined over the same period. In parallel, export pricing trends indicate a reduction in exporter prices. Taken together, these patterns indicate that adjustments occurred on the exporter side alongside increased tariff costs, with import prices reflecting a combination of these movements.

We then extended the analysis by incorporating domestic producer and consumer price indicators to evaluate how these changes are reflected within the U.S. market. The observed patterns show that producer prices increased more noticeably than consumer prices, indicating that downstream price adjustments did not move uniformly. This comparison suggests that tariff-related cost changes for T-shirts were reflected differently across stages of the domestic supply chain, with more limited transmission to final consumer prices relative to upstream adjustments. These observations are consistent with how this market typically behaves, where limited alternatives and relatively steady demand influence how cost changes are passed through the supply chain.14

Based on this analysis, we estimate that approximately sixty-four percent of the total tariff impact on T-shirts was reflected within the U.S. market, with roughly three-quarters of that burden falling on firms in the T-shirt supply chain and the remaining quarter passed through to consumer prices for T-shirts.15

Conclusion

We were able to evaluate how IEEPA tariff-related costs are distributed between foreign exporters, U.S. firms, U.S. supply chain participants, and U.S. end consumers using observable trade and pricing data by combining trade data with pricing indicators across multiple stages of the supply chain. This allows for a clear view of where cost adjustments occur and how they evolve across exporter markets, importer behavior, and downstream pricing.

Beyond informing strategic and operational decisions, this approach can also support analysis in regulatory, commercial, and contested settings, where the allocation of tariff-related costs or recoveries across market participants is a central question.

Where Stout Can Add Value

By integrating trade data, pricing indicators, and country-level analysis, our team of professionals can help:

  • Quantify tariff exposure by product, country of origin, and time period, including across overlapping programs and changing tariff rates
  • Evaluate how tariff-related costs are reflected across export prices, import values, and downstream pricing, distinguishing pass-through to firms, supply chain participants, and end consumers
  • Apply elasticity-based and market-specific analysis to assess the allocation of tariff burdens, and any associated recoveries, among exporters, importers, intermediate firms, and end consumers
  • Support strategic, commercial, and regulatory decision-making with rigorous, data-driven analysis of how tariff cost changes have moved through specific industries and product categories
  • Provide independent economic analysis in connection with contested matters, including disputes involving tariff refunds, restitution, contractual recoupment, and the allocation of recovered duties across supply chain participants
  • Deliver transparent, reproducible findings grounded in observable trade and pricing data, suitable for use in regulatory inquiries, commercial negotiations, and litigation settings
  1. “Countries & Regions,” Office of the United States Trade Representative, webpage. https://ustr.gov/countries-regions; Kevin Breuninger, “See Trump’s list: More than 180 countries and territories facing reciprocal tariffs,” CNBC, April 2, 2025. https://www.cnbc.com/2025/04/02/trump-reciprocal-tariffs-countries-chart-imports-united-states.html
  2. Learning Resources, Inc., et al. v. Trump, President of the United States, et al., Certiorari Before Judgment to the United States Court of Appeals for the District Of Columbia Circuit, No. 24–1287. Argued November 5, 2025—Decided February 20, 2026. https://www.supremecourt.gov/opinions/25pdf/24-1287_4gcj.pdf
  3. “Who Really Pays for Tariffs? Understanding Tax Incidence in a Global Economy,” Res Publica, webpage, May 31. https://www.r-publica.com/insights/who-really-pays-for-tariffs-understanding-tax-incidence-in-a-global-economy
  4. “Tariffs,” David Henderson, Econlib. https://www.econlib.org/tariffs/
  5. “Fact Sheet: President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico and China,” Fact Sheet, The White House, February 1, 2025. https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-imposes-tariffs-on-imports-from-canada-mexico-and-china/
  6. “Modifying Reciprocal Tariff Rates Consistent With The Economic and Trade Arrangement Between The United States and the People’s Republic Of China,” Executive Order, November 4, 2025. https://www.whitehouse.gov/presidential-actions/2025/11/modifying-reciprocal-tariff-rates-consistent-with-the-economic-and-trade-arrangement-between-the-united-states-and-the-peoples-republic-of-china
  7. “Regulating Imports With a Reciprocal Tariff To Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits,” Federal Register, April 7, 2025. https://www.federalregister.gov/documents/2025/04/07/2025-06063/regulating-imports-with-a-reciprocal-tariff-to-rectify-trade-practices-that-contribute-to-large-and
  8. Ibid.
  9. “Modifying Reciprocal Tariff Rates Consistent With The Economic and Trade Arrangement Between The United States and the People’s Republic Of China,” Executive Order, November 4, 2025. https://www.whitehouse.gov/presidential-actions/2025/11/modifying-reciprocal-tariff-rates-consistent-with-the-economic-and-trade-arrangement-between-the-united-states-and-the-peoples-republic-of-china
  10. Akana K. J. Ma, John C. Ramig, Seth Trimble, Sonja Arndt-Johnson, Marshall L. Olney, “CIT Orders CBP to Remove IEEPA Tariffs from Unliquidated Entries – Pressure Builds on CBP to Roll Out a Refund Procedure,” Buchalter, March 5, 2026. https://www.buchalter.com/insights/cit-orders-cbp-to-remove-ieepa-tariffs-from-unliquidated-entries-pressure-builds-on-cbp-to-roll-out-a-refund-procedure/
  11. Firms are business organizations engaged in producing, distributing, or selling goods and services. Supply chain participants refer to firms and other entities involved in the production, distribution, and resale of goods across the supply chain. End consumers refer to individuals or households purchasing goods for personal use rather than resale or production purposes.
  12. The answer to that question depends on the specific industry, product, time period, contractual structure, and market conditions at issue. Findings in one matter or product category are not necessarily indicative of findings in another.
  13. U.S. Trade & Tariff Data, DataWeb, webpage. https://dataweb.usitc.gov/
  14. Scott Sumner, “Are tariffs a big threat to China?” EconLib, September 18, 2018. https://www.econlib.org/are-tariffs-a-big-threat-to-china/
  15. This estimate applies specifically to T-shirts and should not be generalized to other apparel categories, textile products, or goods subject to different tariff schedules or supply chain structures.