Who pays U.S. tariffs? Short answer: we all do.
A plain-English explainer for retailers and customers • As of August 12, 2025
Co-authors: Ellen Jacobson and ChatGPT (research & drafting assistance)
The short version
U.S. importers pay tariffs as the importer of record [1]. Payment is due at entry within about 10 working days or via a monthly consolidated statement [3][4].
Those costs roll into landed cost/COGS and usually into retail prices. Because sales tax is applied to the selling price, sales tax rises when prices rise [10].
Overseas factories do not pay U.S. tariffs. They feel the impact indirectly via lower or delayed orders or pressure on FOB prices (see current HTS/FR context) [5][6][7].
How we got here: lower-cost production abroad, higher-value work at home
From the late 1980s onward, many labor-intensive goods (like apparel) shifted to lower-wage countries (for example, China and Sri Lanka) to keep unit costs competitive. At the same time, the U.S. economy specialized more in high-value activities such as design, marketing, software, logistics, healthcare, and advanced manufacturing. Result: a persistent goods trade deficit alongside a services surplus, with overall output growing over time. Proof point: Real U.S. GDP has climbed markedly over the past 50 years [8]. Unemployment has been relatively low in most expansions over that period [9].
Figure 1. Real GDP (GDPC1) — official FRED chart
Open live chart (UNRATE) on FRED
By the numbers: prices & COGS context
Long-run prices tell the story. Overall consumer prices rose roughly sixfold over ~50 years, while apparel prices rose far less—consistent with global sourcing and competition:
CPI (All Items): prices up roughly 6× since the mid-1970s [11].
CPI (Apparel): up much less over the same period [12].
Figure 3. CPI — All Items (CPIAUCSL)
Open live chart (CPIAUCSL) on FRED
Figure 4. CPI — Apparel (CPIAPPNS)
Open live chart (CPIAPPNS) on FRED
Who writes the check (and when)
By law, the importer of record is liable for duties [1]. Importers file entry or summary and deposit estimated duties within about 10 working days of entry [3], or pay on a Periodic Monthly Statement if enrolled [4].
Plain English: how the money actually moves (bond + ACH debit)
U.S. importers maintain a customs bond (usually a continuous bond) [2] and pay duties electronically through CBP’s ACH system [3] — either within about 10 working days of entry or as one consolidated monthly debit under Periodic Monthly Statement [4]. The bond does not prepay duties; it guarantees payment and compliance. If an importer fails to pay, CBP can draw on the bond [2]. Either way, it’s our cash up front, which is why tariff costs flow into landed cost and, ultimately, into price (and the sales-tax line, since sales tax is calculated on the final selling price) [10].
Illustrative landed-cost example (for context only)
Assume a bra (HTS 6212.10, man-made), customs value $10.00. Base duty is about 16.9 percent ($1.69) [5]. If a 10 percent baseline tariff applies ($1.00) and a country add-on of 20 percent applies ($2.00) (verify current FR and HTS notes) [6][7], total duties are about $4.69 (about 46.9 percent of customs value). The duty-paid customs value is therefore $14.69 ($10.00 + $4.69).
Note: The $14.69 figure does not include international freight, drayage, inland freight, warehousing, pick and pack, insurance, customs brokerage, MPF/HMF, financing or bank fees, administrative overhead, sales commissions, research and development, marketing, or taxes. These direct and indirect costs also affect the final shelf price and, in turn, the sales-tax amount since sales tax is calculated on the final selling price [10].
What to tell customers
Tariffs are U.S. taxes collected at the border from U.S. companies. We pay them up front to bring goods in [1][3][4].
Those costs increase our landed cost, which usually means higher retail prices and higher sales tax because it’s calculated on the final selling price [10].
We continually work on sourcing and efficiencies to soften increases, but the current tariff structure on many origins is material [5][6].
Tariffs affect price, but the right fit saves money over time. Start with our quick Fit Guide, then see the best sellers built to last.