A new study cited by the Wall Street Journal suggests that U.S. tariffs are quietly weighing on the domestic economy. This resistance may help explain why the crypto market has struggled to gain momentum since the October crash.
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 cost was borne by U.S. consumers and importers, while only 4% was borne by foreign exporters.
Almost all of the approximately $200 billion in tariff revenue was paid within the U.S. economy.
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Tariffs act like domestic consumption taxes.
This study challenges the core political argument that tariffs are paid by foreign producers. In reality, U.S. importers pay customs duties at the border and absorb or pass on the cost.
Foreign exporters kept prices largely stable. Instead, they shipped fewer products or diverted supplies to other markets. As a result, imports did not become cheaper, but trade volumes decreased.
Economists describe this effect as sluggish consumption tax growth. Prices won’t go up anytime soon. Costs trickle down the supply chain over time.
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US inflation remains moderate, but pressures are increasing
Inflation in the United States remained relatively subdued until 2025. This led some to conclude that the tariffs would have little impact.
But only about 20% of tariff costs reached consumer prices within six months, according to a study cited by the Journal. The rest was left in the hands of importers and retailers, squeezing profits.
This delayed pass-through explains why inflation has remained modest while purchasing power has been quietly eroded. The pressure built up instead of exploding.
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How does this relate to the stagnation of the cryptocurrency market?
Crypto markets rely on discretionary liquidity. This level will rise as households and businesses feel confident to deploy surplus capital.
Tariffs slowly drained that surplus. Consumers paid more. Businesses absorbed the costs. There is less cash available for speculative assets.
This helps explain why cryptocurrencies have not crashed since October, but also why the uptrend has failed as well. The market has entered a liquidity plateau rather than a bear market.
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The economic downturn in October caused leverage to plummet and ETF inflows to stagnate. Under normal circumstances, easing inflation might have revived risk appetite.
Instead, tariffs quietly continued to tighten financial conditions. Inflation was above target. The Fed remained cautious. Liquidity did not expand.
As a result, virtual currency prices moved sideways. There was no panic, but there was also no impetus for a sustained rally.
Overall, new tariff data alone cannot explain crypto volatility. But this helps explain why the market stalled.
Tariffs quietly strengthened the system, depleted discretionary capital, and slowed the recovery in risk appetite.
