A new study reported by The Wall Street Journal shows that U.S. tariffs are mostly paid not by foreign companies, but by Americans themselves.
According to the Kiel Institute for the World Economy, from January 2024 to November 2025, almost all costs were borne by consumers and importers in the U.S. They accounted for about 96% of the costs. Only 4% fell on foreign exporters.
Nearly $200 billion in tariff payments stayed within the U.S. economy. This ate up part of the available cash and may have slowed demand for risk, including cryptocurrencies.
Tariffs Essentially Act as a Tax on Domestic Consumption
The study challenges the popular political argument that tariffs are paid by foreign producers. In practice, things look different. Duties at the border are paid by American importers, who then either absorb these costs or pass them on to the next participants in the supply chain.
Foreign exporters in most cases did not lower prices. Instead, they simply supplied fewer goods or redirected them to other markets. As a result, imports did not become cheaper, and trade volumes decreased.
Economists describe this effect as a slow consumption tax. Prices do not spike sharply. Costs accumulate gradually and move step by step through supply chains, putting increasing pressure on the economy.
Inflation in the U.S. Remained Moderate, but Pressure Was Building
Throughout 2025, inflation in the U.S. did appear relatively calm. Because of this, many decided that tariffs had little impact on the situation.
But studies cited by The Wall Street Journal show a different picture. In the first six months, only a small portion of tariff costs made it into consumer prices. The main burden remained with importers and retail chains, which lost margin but were in no hurry to raise prices.
That is why inflation remained subdued for a long time, and purchasing power declined almost imperceptibly. The pressure did not result in a sharp price spike but accumulated gradually, creating background tension in the economy.
How This Relates to Stagnation in the Crypto Market
The crypto market directly depends on free liquidity. It grows when households and businesses feel confident and are ready to direct excess capital into risky assets.
Tariffs gradually drained this liquidity. Consumers paid more. Companies absorbed some of the costs. As a result, there was less and less free money for speculative investments.
This helps explain why, after the October sell-off, the crypto market did not collapse but also could not move into sustained growth. The market did not enter a full bear trend, but it also has not yet gained the strength to grow.
The October correction cleared the market of excess leverage and slowed the inflow of funds into ETFs. Under normal conditions, slowing inflation could have renewed interest in risky assets.
However, tariffs quietly maintained tight financial conditions. Inflation remained above target levels. The U.S. Federal Reserve continued to act cautiously. Liquidity never started to increase.
Against this backdrop, cryptocurrency prices moved sideways. There was no panic in the market, but there was also no fuel for sustained growth.
Overall, the new tariff data does not explain crypto market volatility by itself. However, it does show well why the market has been stuck for so long without a clear direction.
Tariffs gradually tightened the financial system, drained free capital, and delayed the return of risk appetite.
