After Liberation Day: Who is footing the tariffs bill?

Summary

Business Daily (BBC World Service)

Episode: After Liberation Day: Who is Footing the Tariffs Bill?

Air date: March 29, 2026
Host: Ed Butler

---

Episode Overview

This episode examines the economic aftermath of Donald Trump’s so-called "Liberation Day"—April 2, 2025—when the US imposed sweeping tariffs on imported goods. Ed Butler explores the real impact of these tariffs over the past year, investigating who is shouldering the financial burden: US consumers, businesses, or foreign exporters? The episode features expert commentary from economists and firsthand accounts from business leaders affected by the tariffs.

---

Key Discussion Points & Insights

1. What Was “Liberation Day” and Why Was it Introduced?

• President Trump’s Justification: The tariffs were presented as a means to "level the playing field" for American workers and to reclaim America’s economic destiny.
  • "April 2, 2025 will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed…" – Donald Trump [01:14]
• Scope of Tariffs: Encompassed a vast array of imported goods with initial rates as high as 50%, later negotiated down for some countries.
• Aim: Political objectives included pressuring foreign governments for concessions, balancing trade, and encouraging reshoring of manufacturing.

2. Who Pays for the Tariffs?

• The Economic Consensus: US consumers and import-dependent firms bear most of the cost, despite administration claims.
  • "US Consumers are paying for tariffs. So a manufacturer will pass on to the wholesaler, to the retailer, and ultimately the consumer." – Dana Peterson [01:50], [03:06]
• Trump’s Contradictory View: The administration maintains that tariffs are a tax on foreign countries:
  • "A tariff is a tax on a foreign country. That's the way it is, whether you like it or not." – Donald Trump [03:42]
• How Tariffs Are Collected: Paid at port of entry by whoever is importing, eventually affecting the end consumer, especially in retail or direct-to-customer transactions.

3. Impact on US Businesses

• Immediate Challenges: Businesses reduced spending, cut hiring, and tried to shift supply chains.
  • "The tariffs were a big problem. We immediately cut our spending, stopped hiring, and began to move our supply chain out of China." – Rick Waldenberg, Learning Resources [04:23]
• Litigation: Some companies sought legal remedies, notably suing over the legality of tariff imposition.
• Absorbing Costs: Many firms passed on as little price increase as possible and “swallowed the rest,” adversely impacting margins.
  • "Our federal plus our state plus our duties and our tariffs amounted to a marginal tax rate...greater than 100%. So, you know, make a dollar, pay more than a dollar in taxes." – Rick Waldenberg [04:55]

4. Data & Economic Outcomes

• Tariff Revenue: Estimated at $300 billion (2025), helping government finances but raising questions about broader economic costs [05:39].
• Foreign Exporters’ Reactions: Some, like Japanese carmakers, temporarily lowered prices to retain US market share but this effect was short-lived [06:32].
• Pass-Through Rate:
  • US importers bear "roughly 90 to 95%" of tariff costs at first, gradually passing more to consumers [07:44].
  • "US consumers are bearing about half that cost as the importers pass on the higher charges..." – Ben Steele, Council on Foreign Relations [07:44]
  • Trend is for consumers to shoulder more of the burden as time goes on [09:03].

5. Effects on Inflation and Growth

• Direct Impact: Tariffs believed to have added 1.5% or more to inflation, with US inflation running at about 3% (pre-energy price surges) [11:00].
  • "If you get away from tariffs, inflation is in the low twos, right?" – Jerome Powell, Federal Reserve [10:41]
• Spending Patterns: Consumers shifting from discretionary to essential purchases; hiring and investment stalling outside select sectors [12:40].
• Trade Slowdown: Imports and exports both down compared to previous year.
• Weak Labor Market: Businesses not hiring nor firing; general stasis [12:06].

6. Political and Strategic Outcomes

• Negotiation Tool: Tariffs succeeded in bringing countries to negotiate for trade concessions.
  • "130 countries came into the USTR...and wanted to negotiate down the tariffs." – Thomas Philipson, former Trump economic adviser [14:00]
  • Example: Major trade deal with Europe cited as a direct outcome [15:32].
• Contrarian View on Inflation: Professor Philipson contends that tariffs, as a sectoral tax, aren’t inflationary in aggregate, as they cause spending to shift rather than increase total prices [15:49].
• Tariffs’ Economic Significance Downplayed: "Total tariff revenue...is about 250 billion for 2025. That’s tiny. That’s less than 1% of our GDP..." – Thomas Philipson [16:57]

7. Legal and Ongoing Policy Battle

• Supreme Court Ruling: Declared the use of the 1977 International Emergency Economic Powers Act for tariffs unlawful, affecting the legal standing of many tariffs [17:31].
  • Rick Waldenberg expects to reclaim $11–12 million lost to tariffs [18:10].
• Policy Response: Administration responded by imposing a new flat 15% tariff globally, with legal challenges ongoing [18:31].
• Future Uncertain: While some firms remain optimistic, there is ongoing vigilance against future executive actions.

---

Memorable Quotes & Moments

• Donald Trump on Liberation Day:
  "April 2, 2025 will forever be remembered as the day American industry was reborn..." [01:14]

• Dana Peterson, on Tariff Pass-Through:
  "Ultimately, US Consumers are paying for tariffs." [03:06]

• Rick Waldenberg on Business Impact:
  "From a math standpoint...a marginal tax rate on our company last year of greater than 100%." [04:55]

• Ben Steele’s Breakdown:
  "US importers are bearing roughly 90 to 95% of the tariff cost relative to foreign exporters. And then US Consumers are bearing about half that cost..." [07:44]

• Thomas Philipson on Policy Purpose:
  "The reason he did what he did...was to essentially get leverage in foreign negotiations. So the tariffs were set very high…" [14:00]

• Jerome Powell, Fed Governor, on Inflation:
  "...inflation is in the low twos, right? So it's really tariffs that's causing…most of the inflation overshoot." [10:41]

• Rick Waldenberg on Legal Recourse:
  "Those 11 or $12 million...we borrowed from the bank and then handed it over to the government, which obviously doesn't enhance the health of your company." [18:10]

---

Timestamps for Key Segments

• [01:00] Introduction to the episode and Liberation Day context
• [03:06] Dana Peterson explains tariff pass-through
• [04:23] Rick Waldenberg describes business response
• [05:57] Ben Steele discusses who pays the tariffs
• [07:44] US importers vs. consumers – cost sharing
• [10:41] Jerome Powell on tariffs and inflation
• [12:06] Dana Peterson on broader economic impacts
• [14:00] Thomas Philipson on the political strategy behind tariffs
• [15:32] Example of trade concessions achieved
• [17:31] Legal challenges and Supreme Court ruling
• [18:10] Waldenberg on financial losses and legal recourse
• [18:31] New tariffs and ongoing battles
• [19:31] Wrap-up and outlook

---

Tone & Takeaways

The episode is analytical but accessible, focusing on real economic consequences and avoiding partisan rhetoric. Guests provide varied perspectives, from data-driven economic analysis to the pragmatic realities for US import-dependent businesses.

Bottom line:
While tariffs may have strengthened the government’s negotiating position and brought in revenue, the burden has landed primarily on US firms and consumers, contributing to higher prices, stalled investment, and broader economic headwinds. The legal status and future direction of US tariff policy remain highly contested and uncertain.

---

Transcript

[Ed Butler]

This BBC podcast is supported by ads outside the uk we face the greatest challenges of our time, challenges that test our limits. There is a place where we can find answers, where journeys break new ground and connections unlock opportunities, where innovation can spark real change and our actions can push our world forward. Singapore, where business events can create lasting impact.

[Tejas Si]

What happens when you design healthcare around people, not systems? I'm Tejas Si, special host of Resilient Edge, a business vitality podcast paid and presented by Deloitte. Learn how Deloitte, AWS and Elevance Health are turning fragmented systems into effortless intelligent care. Available now wherever you listen to podcasts.

[Ed Butler]

Hi there, I'm Ed Butler. Welcome to Business Daily from the BBC World Service. It's nearly a year now since Donald Trump's self titled Liberation Day, the day that the president imposed sweeping tariffs on countries around the world.

[Donald Trump]

My fellow Americans, this is Liberation Day waiting for a long time. April 2, 2025 will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to make America wealthy again.

[Ed Butler]

The aim, President Trump said, was to level the playing field. But what has a year of tariffs done to US Firms reliant on imports? And more specifically, who's been paying for them?

[Dana Peterson]

US Consumers are paying for tariffs so a manufacturer will pass on to the wholesaler, to the retailer, and ultimately the

[Ed Butler]

consumer, pricing a year of Trump's tariffs. That's Business Daily from the BBC.

[Donald Trump]

For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike.

[Ed Butler]

Donald Trump has always been fond of tariffs, and for his second term in office, he's made them an economic priority which will, as he sees it, right past wrongs.

[Donald Trump]

American steel workers, auto workers, farmers and skilled craftsmen. They watched in anguish as foreign leaders have stolen our jobs, foreign cheaters have ransacked our factories, and foreign scavengers have torn apart our once beautiful American dream.

[Ed Butler]

He called April 2 last year Liberation Day, freeing the US from unequal trade practices as he saw them by hiking tax rates on foreign imports pretty much across the board. Most economists were aghast. Slapping new taxes on a vast array of imported goods wouldn't just disrupt the global trading system, they said it would place a massive extra burden on US Consumers as well.

[Dana Peterson]

Ultimately, US Consumers are paying for tariffs.

[Ed Butler]

Those are the words of Dana Peterson. She's the chief economist at the Conference Board in New York.

[Dana Peterson]

How does this happen? Well, when a product is shipped into the US it does not leave the port or come off the truck until someone pays a tax. It's called a customs duty slash tariff. So if it's a manufacturer, they pay the tax. If it's a wholesaler or retailer, they pay the tax. If it's direct to customer like Temu or Shine, the customer will pay the tax.

[Ed Butler]

Well, that's the conventional wisdom, but it's not the President's.

[Donald Trump]

A tariff is a tax on a foreign country. That's the way it is, whether you like it or not. A lot of people like to say, oh, it's a tax on us. No, no, no. It's a tax on a foreign country. It's a tax on a country that's ripping us off and stealing our jobs.

[Ed Butler]

Initially, the tariff rates that were threatened were very high, 50% or more for some countries, although they did come down across the year as a host of nations stepped in to negotiate new trade deals. Still, they did prove a burden to many US Firms dependent on imported goods. Rick Waltenberg heads an educational toy company called Learning Resources based in Illinois.

[Rick Waltenberg]

The tariffs were a big problem. Obviously we immediately cut our spending, stopped hiring, and began to, on an emergency basis, substantially accelerate the moving of our supply chain out of China. We also chose in the week of Liberation Day to look for litigation and eventually we sued on our own on April 22.

[Ed Butler]

So it's been a tough year and you passed on some of those costs to your consumer, but not all. You're saying you swallowed the rest.

[Rick Waltenberg]

So we put as little price increase out as we could. You know, we're a mission driven business and so the selling price of our product affects us both directly and indirectly. The indirect part is we want children to have access to our products, schools as well. And so we like to keep our pencil as sharp as we possibly can. From a math standpoint, our federal plus our state plus our duties and our tariffs amounted to a marginal tax rate on our company last year of greater than 100%. So, you know, make a dollar, pay more than a dollar in taxes. That's why every importer has to pass it on. It's simple math. You can't stay in business unless you're content to liquidate your company slowly into the pockets of the government. You have to pass it on.

[Ed Butler]

Rick Waldenberg well, the money that the tariffs have generated has certainly helped balance the government's books. They've brought in some $300 billion into the US treasury by recent estimates. But that does beg the question, who ultimately has been paying for these import duties.

[Ben Steele]

It's important to emphasize that those taxes, tariffs or import taxes, are paid overwhelmingly by Americans and not, as the President would have it, by foreign countries.

[Ed Butler]

That's Ben Steele. He's a senior fellow and director of International economics at the US Council on Foreign Relations. They describe themselves as a nonpartisan independent think tank. He accepts that early on last year, some foreign exporters, like carmakers in Japan, for example, were cutting their prices to offset the rising tax burden.

[Ben Steele]

Treasury Secretary Scott Besant, quite soon after the Liberation Day tariffs were announced, announced that there would be a 90 day pause. So companies like Toyota were trying to hold their place in line, making sure that they would maintain their market share, hoping that these tariffs would come down.

[Ed Butler]

So that involved them cutting their prices to some extent.

[Ben Steele]

I mean, the reaction of suppliers in different countries and different industries was very different, depending on their situation, depending on how much competition they face, depending on the ability of the US importer to shop for alternative suppliers. But as we go through time, the marketplace started to form a judgment of just how permanent and just how high these tariffs would be.

[Ed Butler]

Once the tariff regimes were kind of bedded in, were the major US retailers swallowing the costs for fear of upsetting their customers?

[Ben Steele]

They were. And they also believed that over time these tariffs might come down either through these bilateral deals that the Trump administration was negotiating or through specific exemptions. And of course, a lot of big firms in the United States were lobbying for exemptions. Having said this, after it became clear that there would be significant tariffs in place and that they would be applying globally, you started to see more pass through of the cost to consumers. So broadly, where we are now is that US importers are bearing roughly 90 to 95% of the tariff cost relative to foreign exporters. And then US Consumers are bearing about half that cost as the importers pass on the higher charges that they're facing.

[Ed Butler]

So up to now, the retailers, those big firms, maybe Costco or Walmart or the others who are selling foreign goods to American consumers, they are swallowing about half the price that they are paying for for tariffs at the moment.

[Ben Steele]

Roughly, that's right. And as we go forward into 2026, we can expect the American consumer to bear even more of those costs.

[Ed Butler]

Economist Ben Steele of the Council on Foreign Relations. You're listening to Business Daily on the BBC World Service.

[Tejas Si]

Grocery prices are skyrocketing.

[Ben Steele]

But true Nature meats Texas smoked brisket

[Tejas Si]

delivers authentic flavor for under $6 per person.

[Ben Steele]

30 years supplying the finest BR barbecue joints. Chances are you've already had their brisket. Old school smoky tenderness pre cooked and ready heat in 2 minutes.

[Tejas Si]

Pile high for tacos or sandwiches.

[Ben Steele]

Restaurant level at home Exceptional taste honest

[Tejas Si]

value visit truenaturemeats.com code free meat for

[Ben Steele]

20% off plus free New York strip Texas Smoked Brisket and Mediterranean Chicken with

[Tejas Si]

Code free [e-mail] hey, it's Ryan Seacrest for Albertsons and Safeway. Cold weather can wreak havoc on your skin. You don't want to miss out on this month's great savings on all your favorite skincare essentials. Now through March 31, earn four times points when you purchase participating skincare items like Dove Soap, Dove Body Wash, Dove Beauty Bar, Soft Soap Body Wash and Irish Spring Body Wash. Points can be redeemed later for discounts on groceries or gas. Offer ends March 31. Restrictions apply. Promotions may vary. Visit albertsons or safeway.com for more details.

[Ed Butler]

I'm Ed Butler and today we're looking at the true price of tariffs. Who's been paying for them over the last year? And if, as Ben Steele says, it's the US Consumers who've been footing the bill, then how's that showing up in the data?

[Tejas Si]

If you get away from tariffs, inflation is in the low twos, right? So it's really tariffs that's causing the most of the inflation overshoot. And we do think of those as likely to in the current situation as likely to be a one time, you know, one time price increase. Our job is to make sure that it is, and we will do that job.

[Ed Butler]

That's the governor of the US Federal Reserve, Jerome Powell, speaking earlier this year. The Fed and other economists have made no bones about the fact that tariffs have raised US consumer prices possibly by as much as 1 1/2% or more. US inflation is currently officially running at around 3%, although that has been measured before the recent price hikes in fuel that we've seen since the start of the Iran war. Dana Peterson, chief economist at the Conference Board, says that it's too early to say precisely how much tariffs have pushed up prices, but she's also in no doubt that they have the full impact

[Dana Peterson]

of tariffs were shifted twice because of delays, and so now that we're seeing those prices rising more precipitously, especially for food, furniture, anything that's imported. We're starting to see that now in the underlying data. And the reason why it's not been as obvious is because overall inflation has been slowing and certainly you're seeing higher costs for imported products.

[Ed Butler]

How would you say the U.S. economy is performing generally this year well, we

[Dana Peterson]

don't have that much data because we had a lengthy shutdown at the end of last year that delayed a lot of data. But the data that we are coming in are not very strong. They're actually quite weak. Both real data, like consumer spending, inflation is higher. We're not seeing any real churn in the labor market because businesses are still on hold. They're not firing people, but they certainly are not hiring anyone. And so that dynamism is lost in the labor market. And also consumer confidence is very weak.

[Ed Butler]

It's going to be a tough 26 as far as you can see.

[Dana Peterson]

Yes, we've seen that consumers in the US have shifted their spending away from discretionary goods and services towards necessary goods and services. We've also seen inflation rise, especially in those areas, areas where goods are most likely to be affected by tariffs, and also for services that use imported goods, such as restaurants, more retailers. We've also seen trade in the US decline. Imports at the end of 2025 were significantly slower relative to 2024. At the same time, same thing with exports. We've also seen that businesses have been in stasis because of tariffs. They haven't been hiring. They also have not been investing apart from those industries that are focused on technology and also building out data centers.

[Ed Butler]

Dana Peterson but despite those conclusions, there are still some cheerleaders for the tariff regime. Remember, the aim of these tariffs was in part to balance America's trade with foreign countries and to encourage firms producing abroad to bring manufacturing back to the U.S. so those are political goals as well as long term economic ones. Thomas Philipson is a former chairman of the Council of Economic Advisers in Donald Trump's White House during his first term in office.

[Thomas Philipson]

The reason he did what he did in April a year ago was to essentially get leverage in foreign negotiations. So the tariffs were set very high. It didn't really matter how high, in my opinion. The reason was to essentially have them as a negotiation tool, that he would lower them if he got concessions from other countries. Now, in terms of generating negotiations, the evidence is clear that that was a huge success. 130 countries came into the USTR, the US Trade Representative and wanted to negotiate down the tariffs. And then the question became, you know, what concessions were they willing to give up in order to get the tariffs down, and what sort of free trade implications would the President get for US Companies abroad? Obviously, the whole purpose of this was to open up markets for US Companies abroad. That's obviously a free trade movement that the president wanted for U.S. companies even though it restricted trade into the U.S. so the bottom line of this was that with the threat of not trading with the US he could get concessions not only in the economic sphere, but also in the geopolitical sphere from other countries that wanted to open up the US market more after the high April levels of tariffs.

[Ed Butler]

Okay. Giving an example then of an achievement in the economic sphere.

[Thomas Philipson]

Yeah. The European deal would never have occurred, for example, without it. That was an extremely positive development where the Europeans gave a lot of concessions to the US that would never had occurred without that initial election level of tariffs.

[Ed Butler]

How inflationary has it been?

[Thomas Philipson]

Well, there was huge sort of agreement in the economic community. Wrongly, I believe people are paying more for pretty much everything. You can't do that unless the money supply increases or you get checks from the government, like we did during COVID to buy more of everything. That's not feasible. So when the price goes up for imported goods through tariffs, essentially that means people can spend money on other things and those prices will decline, essentially. So taxes on specific industries, such as tariffs, are never inflationary. They of course, may raise prices on those taxed industries, but that will be offset typically by reductions in other industries where people are spending less of their money.

[Ed Butler]

But who's actually paying these taxes? I suppose that's the question, because the analysis I've seen is that 90% of these taxes are being borne by the importing companies, the major high street retailers, for example, some of whom whose goods are imported, and that the bulk of that has been passed on to the consumer.

[Thomas Philipson]

The key here, in my view, is that this is small potatoes. If you look at the total tariff revenue, it's about 250 billion for 2025. That's tiny. That's less than 1% of our GDP. Essentially. The amount of attention this gets in terms of economic media is enormous relative to the small size that taxes on imported goods distort our economy in the US I think it's very exaggerated relative to the numbers I just mentioned.

[Ed Butler]

Former Trump economic adviser Professor Thomas Philipson. Across the last year, there have been all kinds of ebbs and flows in the tariff regime, not least the Supreme Court ruling back in February that declared these import tax taxes, which were imposed by the administration using a specific 1977 law, the International Emergency Economic Powers Act. Well, they had been unlawfully applied. It said educational toy maker Rick Waldenberg was part of that legal action. And he's among those hoping to claw back some of the money that he's lost over the last year.

[Rick Waltenberg]

I think legally, I'M due a re raise.

[Ed Butler]

How much?

[Rick Waltenberg]

In our case, it'll be, I imagine, between 11 and 12 million dollars. And so just to put that into context, again, those 11 or $12 million that we spent is money that we had to borrow from the bank. So essentially in order to pay these bills, we borrowed from the bank and then handed it over to the government, which obviously doesn't enhance the health of your company.

[Ed Butler]

Well, the Trump administration have not taken the legal setbacks lying down. They've imposed a 15% tariff pretty much globally since then. And the courtroom battles on that to continue, I should add. The president has also promised to pass on some of the profits of the tariff revenue in the form of new tax breaks for Americans. And many experts say that the administration may yet have plenty of tools to go on deploying these tariffs long term. Here's Rick Waldenberg.

[Rick Waltenberg]

Again, we're in the middle, not at the end, but we've achieved a lot so far. And I'm happy to say our company is healthy. We're optimistic about this coming year. And we've tried to refocus ourselves on running our business and planning for the future, including investing for the future. At the same time, we're not prepared to allow the executive branch to put us out of business. And so we're still alert to the legal risks and we'll be keeping an eye that.

[Ed Butler]

The U.S. educational toy maker, Rick Waldenberg. And that's it for this edition of Business Daily, the true price of tariffs, one year after the President's Liberation Day. I hope you enjoyed it from me and the rest of the Business Daily team. Take care.

[Tejas Si]

The Bleacher Report app is your destination for sports right now. The NBA is heating up, March Madness is here and MLB is almost back. Every day there's a new headline, a new highlight, a new moment you've got to see for yourself. That's why I stay locked in with the Bleacher Report app. For me, it's about staying connected to my sports. I can follow the teams I care about, get real time scores, breaking news and highlights all in one place. Download the Bleacher Report app today so you never miss a moment.