Why it matters
The gap between who pays a tariff legally and who pays it economically is the whole substance of the policy, and it is where public argument almost always goes wrong. The importer remits the money; whether that importer can pass it on depends on whether buyers have alternatives, and whether the exporter absorbs part of it depends on whether they have other customers. None of that is decided by the announcement.
Mechanism only, no quantities — how far the cost travels in each direction depends on the alternatives available to each party.
Tariffs also act as a supply shock, which makes them visible in inflation data without being monetary in origin. They raise the price of specific goods through a specific channel, and a central bank facing that increase has no instrument that addresses the cause. Distinguishing this from demand-driven inflation matters for reading how policy is likely to respond.
The second-order effects are usually larger than the first. Firms reroute sourcing, relocate assembly, or reclassify goods, and trading partners respond in kind. The revenue raised and the price change on the affected goods are the measurable parts; the reorganisation of supply chains is the durable one.
What to watch for
“China pays the tariff” describes the legal form, not the incidence. Payment is made by the importing firm to its own government. The economic burden is split, and the split is an empirical question that differs by product.
The direct price effect is narrow and the indirect one is wide. A tariff on an input raises costs for everything made with it, including goods that are never imported. Tracing the effect only through the price of the tariffed item understates it.
Exemptions and carve-outs do most of the work. Headline rates are applied to schedules with extensive exclusions. The announced rate and the effective average rate on actual trade flows are usually different numbers.
Currency movements can offset or amplify. If the exporting country’s currency weakens against the importer’s, part of the tariff is absorbed by the exchange rate before it reaches any price. This mutes the effect without changing the policy.
Tariff schedules and collected duty are published by customs authorities — US Customs and Border Protection, the European Commission’s TARIC database — and the WTO maintains comparable applied-rate data across members.