Here's an interesting wrinkle in the ongoing tariff debate: Federal Reserve Governor Stephen Miran is calling out what he sees as a fundamental misunderstanding about who actually pays when tariffs hit imports.
Speaking at an event at the Boston University Questrom School of Business, Miran made the case that conventional economic wisdom has gotten this wrong. The standard view among economists is straightforward—tariffs raise prices, American consumers pay those higher prices, end of story. But Miran isn't buying it.
His argument hinges on how we account for these costs. When data shows a U.S. entity absorbing tariff burdens, Miran says calling that an American cost is "entirely inappropriate" if that entity is actually just the U.S. subsidiary of a foreign company. In other words, the accounting makes it look like Americans are paying, but the economic reality might be more complicated.
Miran also noted that he believes many experts have gradually come around to his perspective, recognizing that tariff impacts on the broader economy have been "quite muted."
The Other Side of the Argument
Not everyone shares Miran's optimism about tariff impacts. Just last week, Amazon.com (AMZN) CEO Andy Jassy warned that shoppers were already seeing President Donald Trump's tariffs reflected in the e-retailer's prices. The Yale Budget Lab went further in January, estimating that these taxes cost the typical American household around $1,400 annually.
Economist Paul Krugman argued earlier this month that tariffs had pushed U.S. inflation up by exactly 0.8 percentage points. Even Trump himself acknowledged last month that consumers "might be paying something" because of his tariffs, though he maintained the overall economic impact was positive.
Federal Reserve Chair Jerome Powell has taken a middle position on this. In January, he characterized tariffs as likely producing a "one-time" price increase rather than ongoing inflation. Powell suggested that tariff effects on goods prices would peak and then decline, assuming no major new tariff increases emerge—something he expects to play out over the course of this year.
The disagreement isn't just academic. How tariffs actually affect the economy determines whether they're a useful policy tool or an expensive mistake. Miran's perspective offers a counternarrative to the prevailing view, but the real-world price increases that retailers and consumers are reporting suggest the debate is far from settled.
