# The Shock of the IKEA Tax: "Who Pays the Tariffs?" — The "Invisible Tax Increase" Felt by Households Behind Record Tax Revenue

Introduction——The Reality that Tariffs are "Taxes"

Following the return of President Donald Trump, the United States has further intensified tariffs on imports. Additional tariffs of up to 100% are expected to be applied sequentially from October 1 (U.S. time) on items such as furniture, large trucks, and branded pharmaceuticals, increasing cost pressures on households and businesses once again. While tariffs may appear to be a policy that "imposes a burden on foreign countries" in name, the basic structure in practice is that U.S. importers prepay at customs, ultimately affecting consumer prices.Reuters

What is Happening——Wide Scope and High Rates

In the announcement in late September, tariffs of up to 100% on branded and patented pharmaceuticals, 25% on large trucks, and up to 50% on furniture and kitchen-related items were indicated. The government advocates "protection of domestic manufacturing and national security," but reorganization of supply chains and price increases are unavoidable. Furniture is already on an upward trend in prices, and retailers are warning of further price pass-throughs.Reuters

Who "Actually" Pays——Mechanism and Pass-through

Initially, tariffs are paid by importing companies. From there, it generally settles into three allocations: ① price negotiations with suppliers, ② absorption through corporate profit margins, and ③ pass-through to sales prices. Currently in the U.S., tariff payments at customs have surged, with tariff revenue reaching $165.2 billion just this year (as of August in the U.S. fiscal year 2025). This is an extraordinary increase of +136.7% compared to the same period last year.InfoMoney

The Flip Side of "Revenue Boost"——Inflation and Legal Risks

Tariff revenue has expanded to a monthly scale of 3 trillion yen, contributing to filling the federal budget gap according to some estimates. However, the side effects of price increases and slowed growth cannot be ignored. Furthermore, lawsuits regarding the basis of tariff authority are ongoing, and there is uncertainty as some policies may be suspended depending on the Supreme Court's decision.Cato Institute

Pain Points for Consumers——Sector-by-Sector View

• Furniture & Interior: High tariffs directly hit kitchen cabinets, vanities, sofas, etc. Retailers suggest price pass-throughs, and the term "#IKEA tax" is circulating on social media.The Daily Beast

• Large Trucks: Affects investment decisions in logistics and construction. The rise in new vehicle prices is likely to eventually impact freight rates.Reuters

• Pharmaceuticals: 100% tariffs leave concerns about patient burden and inventory security. Industry groups warn of deteriorating access.Reuters

• Footwear & Apparel: Additional tariffs of around 20% on products from Vietnam and Indonesia are "follow-up tariffs" on top of already high existing tariffs. The burden on school supplies and children's shoes is heavy, and the industry group FDRA has repeatedly issued statements of opposition.Reuters　fdra.org

How Far Will Price Pass-through Go?——Retailers' Perspective

Target and Walmart have stated that "the impact on prices is unavoidable." In response, Trump urged, "Retailers should eat the tariffs." In reality, while some absorption may occur, it is customary for price changes to be reflected at the retail level during inventory cycle updates or contract renewals.The Daily Beast

Supply Chain "Loopholes" and Strengthened Crackdowns

Circumvention exports (transshipment) exploiting tariff differentials have frequently occurred in past rounds. Currently, there is an increase in flows via Vietnam, among others, and the U.S. government is tightening measures with a 40% surcharge on "transshipped goods" and a task force against trade fraud. The prevalence of circumvention leads to tax revenue losses (concerns of a $40 billion scale annually) and price distortions, making enhanced monitoring inevitable.Business Insider

Macroeconomic Impact——Inflation, Interest Rates, Demand

The degree of future price increases depends on the weight of the targeted items and the absorption capacity of companies. Considering the weight and price elasticity of furniture, vehicles, and pharmaceuticals, the risk of sticky core inflation slightly increases in the latter half of 2025. However, current statistics suggest that the impact is "more modest than expected," and some Federal Reserve district presidents have only stated they are "monitoring corporate pricing behavior."The Washington Post

How is Social Media Reacting?——Pros, Cons, and "Meme-ification"

• "For Trump, it's freedom; for businesses, it's uncertainty" (The Economist's X post). Voices lamenting the "policy swings" that bind corporate decision-making.X (formerly Twitter)

• *The phrase "Walmart should 'eat the tariffs'"* spread on X. Media posts conveying Trump's assertion followed, heating up the debate over consumer burdens.X (formerly Twitter)

• *Posts and statements emphasizing that "tariffs are import taxes paid by Americans"* have increased (such as from the retail industry group NRF).National Retail Federation

• For furniture tariffs, the term "#IKEA tax" is used. The brand side also acknowledges the impact of price increases, with public frustration over rising prices and support for manufacturing returning home intersecting.The Daily Beast

Checklist for Investors and Companies to Review Immediately

1. Review of Items and HS Classification: Confirm item definitions and exceptions of new tariffs (FTA/232/201).

2. Origin and Supply Chain: Risks of third-country routing, stricter origin certification, supplier audits.Business Insider

3. Pricing Strategy: Absorption capacity in SG&A, phased price increases, alternative materials/specifications.

4. Inventory and Contracts: Timing of new tariff rate reflection, presence of surcharge clauses.

5. Legal Risks: Trends in Supreme Court decisions and plans to review pricing and supply contracts in case of suspension.The Daily Beast

Conclusion——How to Face the "Invisible Tax"

Tariffs are often politically narrated as making the "other country pay," but the economic reality is that **U.S. importers pay the tax, which is then distributed as an "invisible tax increase" to households and businesses.** Balancing the short-term benefits of fiscal revenue with the long shadows left on prices, supply chains, and diplomatic relations requires more transparent explanation and consensus-building in the future.InfoMoney

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