Last Updated:July 19, 2026, 11:44 IST
The researchers said that the findings point to a hidden cost of tariffs that is often overlooked in public debate.
Economist and former International Monetary Fund (IMF) deputy managing director Gita Gopinath.
Prominent economist and former International Monetary Fund (IMF) deputy managing director Gita Gopinath drew attention to new research examining the impact of US tariffs, arguing that the findings point to an uncomfortable reality for American consumers.
In a post on X (formerly Twitter), Gita Gopinath said that an IMF working paper suggests tariffs imposed by the United States in 2025 did little to force foreign exporters to lower their prices. Instead, US buyers increasingly shifted toward cheaper suppliers whose products were often of lower quality.
The result, according to the study, is that consumers may be paying higher tariff-inclusive prices while receiving lower-quality goods.
What Does IMF Study Say?
The IMF working paper, authored by economists JaeBin Ahn, Lorenzo Rotunno and Michele Ruta, analysed detailed US Census data covering imports and tariffs between February and December 2025. The researchers examined how tariff increases affected prices, sourcing decisions and product quality across thousands of imported goods.
One of the study’s key findings is that foreign exporters largely did not reduce their prices in response to US tariffs. At the most detailed product level, export prices remained broadly unchanged even after tariffs increased. This meant the additional costs created by tariffs were largely passed directly to importers and buyers in the United States.
The paper found that average tariff rates rose by around eight percentage points during the period studied, contributing to a decline in imports of roughly 3.6%.
At first glance, broader product-level prices appeared to decline despite higher tariffs. However, researchers found this was largely because American buyers switched suppliers rather than because exporters cut prices.
Higher-priced suppliers were more likely to leave the US market after tariffs increased, while lower-priced suppliers entered. According to the study, about 65% of the apparent decline in prices was driven by this change in supplier composition.
The researchers argue that lower prices did not necessarily mean better value. To examine whether quality had changed, they developed a measure called “appeal”- a proxy for characteristics such as reliability, quality, brand reputation and customer preference.
Using pre-tariff data from 2023 and 2024, they found that many of the new suppliers attracting US buyers had lower appeal scores. Once these quality differences were taken into account, much of the apparent price benefit disappeared.
The study estimated that roughly half of the observed decline in prices following the 2025 tariffs was linked to a shift toward lower-quality suppliers rather than genuine efficiency gains.
Did Trump Tariffs Ultimately Raise Prices In US?
According to the researchers, the answer is yes.
When tariffs, supplier changes and quality differences were all accounted for, final prices paid by US buyers increased. Without adjusting for quality, tariffs appeared to have only a limited effect on overall prices. However, the study argues that this conclusion can be misleading because it ignores the deterioration in product quality that accompanied supplier shifts.
The researchers said that the findings point to a hidden cost of tariffs that is often overlooked in public debate. Consumers may end up paying more while receiving lower-quality products. Businesses could also face productivity challenges if they are forced to rely on lower-quality imported components and materials.
Future US tariffs could impact consumer prices and product quality, with an IMF study suggesting that tariffs imposed in 2025 led to consumers paying higher prices for lower-quality goods.
Washington D.C., United States of America (USA)
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