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New research cited by the Wall Street Journal suggests that US tariffs are quietly weighing on the domestic economy. This hesitation may help explain why cryptocurrency markets have struggled to gain momentum since the October trades.
A study by Germany’s Kiel Institute for the World Economy found that of the tariffs imposed between January 2024 and November 2025, 96% of the costs were absorbed by American consumers and importers, while foreign exporters accounted for only 4%.
The nearly $200 billion in tariff revenue was paid almost entirely into the US economy.
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Customs duties act as a domestic consumption tax
The study challenges a fundamental political claim that tariffs are paid by foreign producers. In reality, US importers pay customs duties At the border, they then absorb or transfer the costs.
Foreign exporters have kept prices largely stable. Instead, they shipped less goods or redirected supplies to other markets. The result was lower trade volume, not cheaper imports.
Economists describe this effect as: A slow consumption tax. Prices don’t jump immediately. Costs go down in supply chains over time.
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US inflation has moderated, but pressure has increased
shadow Inflation in the United States relatively tight until 2025. This has led some to conclude that Fees do not have a significant impact.
However, studies cited by the Wall Street Journal show that ca Only 20% of the tariff costs have reached consumer prices in six months. The rest was with importers and retailers, putting pressure on profit margins.
This delayed passage explains why inflation has been moderate while purchasing power has quietly eroded. The pressure builds rather than explodes.
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How to deal with stagnation in the cryptocurrency market
Cryptocurrency markets depend Discretionary liquidity. It rises when households and businesses feel confident in investing excess capital.
Tariffs were slowly draining that surplus. Consumers pay more. The companies were above the costs. Cash has become less available for speculative assets.
This explains why the cryptocurrencies did not collapse after October, but they also failed due to the upward trend. Enter the market in a market liquidity p, It is not a bear market.
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The October decline led to a loss of leverage and a halt in ETF flow. Under normal circumstances, a drop in inflation would reinvigorate risk appetite.
Instead, silent fees and difficult to maintain financial conditions. Inflation remains above target. The Federal Reserve remains cautious. Liquidity has not expanded.
Cryptocurrency prices have moved sideways as a result. There was no panic, but there was also no fuel for a sustained increase.
In general, the new rate data alone does not explain crypto volatility. But this explains why the market has stopped.
Tariffs have quietly tightened the system, drained discretionary capital, and delayed the return of risk appetite.
