Who Pays Import Tariffs

The importer of record pays US import tariffs to the government. That is usually the US company that buys the goods, or a broker or foreign seller acting in that role, and the duty is a legal debt to US Customs and Border Protection (CBP). Who ends up bearing the cost economically is a separate question. Foreign exporters, importers, retailers, and households can each absorb part of it, depending on contracts, competition, and timing.

This page separates those two questions, walks through a worked example of how the burden splits, and explains who is entitled to the 2026 tariff refunds. To model a price impact for one product, use the tariff pass-through calculator.

Who is legally responsible for paying tariffs?

Under CBP regulations, duty owed on an import is a personal debt of the importer to the United States (19 CFR 141.1). Four parties can be on the hook:

A foreign government never writes a check to CBP. When a politician says "the other country pays," the most it can mean in practice is that a foreign exporter might cut its price. That is an economic effect, not a legal payment.

Shipping terms decide who acts as importer

For business purchases, the Incoterm on the contract usually settles who clears customs:

• DDP (Delivered Duty Paid): the seller arranges import clearance and pays duty. The seller, or a US entity it designates, acts as IOR and builds the duty into its price.
• DAP, FOB, EXW, and similar terms: the buyer clears customs and pays duty as IOR.

If you buy on DDP terms, the tariff still exists. It is simply inside the invoice price, and you lose visibility into how much of that price is duty.

Consumers who buy from overseas sites

Small parcels used to enter duty-free under the $800 de minimis exemption. CBP has now suspended that exemption indefinitely for all modes other than mail (91 FR 37789), with a companion rule for mail shipments. As a result, a $60 jacket shipped from abroad now owes duty. Either the seller collects it at checkout, or the express carrier collects it, plus a brokerage fee, before delivery. In the second case, you are effectively the importer.

Who bears the economic cost?

Economists call this incidence. The duty is a wedge between what the foreign seller receives and what the US buyer pays. That wedge can be shared four ways:

1. Foreign exporters cut their prices to stay competitive.
2. US importers and wholesalers accept lower margins.
3. Retailers hold shelf prices for a while and absorb the difference.
4. Households and business customers pay higher prices.

The split depends on how easily each party can walk away. A Vietnamese factory with other customers won't cut its price much. A US retailer facing a dozen competitors will hesitate to raise its prices first. A shopper who needs a replacement refrigerator this week has little room to wait.

What the evidence shows about the split

The best-studied episode is the 2018–2019 tariffs:

• Amiti, Redding, and Weinstein found "complete passthrough" of the tariffs into the US prices of imported goods. Foreign exporters barely cut prices, so the burden fell on US buyers (NBER Working Paper 25672).
• Cavallo, Gopinath, Neiman, and Tang found the same near-full pass-through at the border. At the store, however, the price gap between tariffed and untariffed goods was modest, which suggests retailers absorbed much of the cost in their margins (NBER Working Paper 26396).

For the 2025 tariffs, Federal Reserve Board economists used scanner data and found retail prices of China-origin goods were about 8.5% higher year over year by December 2025. That implies roughly 28–32% pass-through to shelf prices so far (FEDS Notes, March 2026). Taken together, US importers pay the duty and initially absorb much of it, and the share reaching consumers grows over months. The pattern of how fast prices move is covered in will tariffs raise consumer prices.

Buyers of US-made goods pay too

Tariffs also reach products that never cross a border. When imported competitors get more expensive, domestic producers face less price pressure and can raise their own prices. Their imported inputs also cost more. A Federal Reserve Bank of New York study of the 2025 tariffs estimated that about 26% of the tariff increase reached consumer prices. Roughly 36% of that came through these indirect channels rather than through imported goods themselves, and the indirect effects took nine to twelve months to work through (Staff Report 1201). In that channel, the money goes to domestic producers as higher revenue, not to the Treasury as duty.

Worked example: following $1,250 of new duty through the supply chain

A US apparel brand imports 1,000 synthetic sweaters from Vietnam at $10 each, for a $10,000 customs value. The HTS General rate for synthetic-fiber sweaters (6110.30.30) is 32%. Since July 24, 2026, Vietnam has also faced a 12.5% Section 301 duty.

Step 1: the importer's legal bill.

• General duty: $10,000 × 32% = $3,200
• Section 301 duty: $10,000 × 12.5% = $1,250
• Total duty paid to CBP: $4,450

Step 2: the exporter shares a little. Suppose the factory agrees to a 3% price cut to keep the order, bringing the invoice to $9,700.

• New total duty: $9,700 × 44.5% = $4,316.50
• Importer's goods plus duty: $9,700 + $4,316.50 = $14,016.50

Before the new duty, the cost was $10,000 + $3,200 = $13,200. The importer's cost now rises $816.50 instead of $1,250. The exporter's concession absorbed $433.50, about 35% of the new duty.

Step 3: the retailer and the shopper. The importer sells to a retailer, which prices the sweater at $40. If the retailer raises the price by $1, it passes along $1,000 across the 1,000 units, more than the importer's $816.50 cost increase. If it holds at $40, the importer and retailer absorb the full $816.50 between them.

The legal payer is the same in every version. Only the economic burden moves. Run your own version of these splits in the tariff pass-through calculator.

Who gets the money back when tariffs are struck down?

Refunds follow the legal payer, not the economic one. This became a live issue in 2026.

IEEPA refunds. The Supreme Court ruled on February 20, 2026 that IEEPA does not authorize tariffs (docket 24-1287). CBP's refund process runs through the CAPE tool in ACE (CBP IEEPA refunds page), with these rules:

• Who can file. Only the importer of record, or the licensed broker that filed the entries, can submit a CAPE declaration. Attorneys cannot file on an importer's behalf.
• Where the money goes. Refunds are paid by ACH to the IOR or its designated notify party.
• Interest. Interest is included, calculated at the quarterly IRS rate from the deposit date to the liquidation or reliquidation date.
• Which entries qualify. As of CBP's September 30, 2026 update, finally liquidated entries were not yet eligible. The government's appeal of the Court of International Trade's refund order is still pending.

What that means for the rest of the chain:

• Retailers that bought on DDP terms paid the tariff inside the price but were not the IOR, so they have no CAPE claim. Any recovery depends on their supply contracts.
• Consumers have no claim against CBP. A shopper who paid a "tariff surcharge" line on an invoice can only look to the seller.
• Importers that passed the duty through to customers still receive the refund. Some contracts include price-adjustment clauses that require sharing it, so check yours.

Section 122 payments. The 10% surcharge in force from February 24 to July 24, 2026 was held unlawful by the Court of International Trade, but only for three plaintiffs (Skadden summary). The government appealed. No general refund process existed as of this update.

Practical takeaways by role

• US importers: you owe the duty whatever your sales terms say to customers. Budget the cash and review contracts for tariff-sharing and refund-sharing clauses. The importer landed cost guide covers the cash timing.
• Retailers buying DDP: ask suppliers to break out the duty component so you can tell price increases from tariff pass-through.
• Small online sellers shipping to US customers: decide whether you or the buyer will act as importer, and say so at checkout. Surprise duty bills at the door drive returns.
• Households: the duty is invisible in most shelf prices. The household tariff basket calculator gives a rough annual estimate of what you might be absorbing.

For how the tariff layers are set and stacked in the first place, start with how US import tariffs work.