New research cited by The Wall Street Journal suggests US tariffs are quietly weighing on the domestic economy. That drag may help explain why crypto markets have struggled to gain momentum since the October sell-off.
A study by Germany’s Kiel Institute for the World Economy found that for tariffs imposed between January 2024 and November 2025, 96% of the costs were absorbed by US consumers and importers, while foreign exporters bore just 4%.
Nearly $200 billion in tariff revenue was paid almost entirely inside the US economy.
The research challenges a core political claim that tariffs are paid by foreign producers. In practice, US importers pay tariffs at the border, then absorb or pass on the costs.
Foreign exporters largely kept prices steady. Instead, they shipped fewer goods or redirected supply to other markets. The result was lower trade volumes, not cheaper imports.
Economists describe this effect as a slow-moving consumption tax. Prices do not jump immediately. Costs seep into supply chains over time.
US inflation remained relatively contained through 2025. That led some to conclude tariffs had little impact.
However, studies cited by the WSJ show only about 20% of tariff costs reached consumer prices within six months. The rest sat with importers and retailers, squeezing margins.
This delayed pass-through explains why inflation stayed moderate while purchasing power eroded quietly. The pressure accumulated rather than exploded.
How This Links to Crypto Market Stagnation
Crypto markets depend on discretionary liquidity. They rise when households and businesses feel confident deploying excess capital.