Donald Trump’s declaration that tariffs on $200 billion of Chinese goods would rise to 25 percent on Friday has revived claims that the import taxes hurt U.S. consumers and businesses.

Recent history, however, suggests that this fear is misplaced. Neither the tariffs placed on steel and aluminum a year ago nor the more recent ten percent tariff on Chinese goods has pushed prices of goods sold to consumers up.

So who is paying for the tariffs? We know the U.S. government has collected billions in tariffs, so it is clear that someone is footing the bill. But keep in mind that when journalists and lobbyists claim, “tariffs are taxes on consumers,” this is inaccurate.

Tariffs are taxes, to be sure. But unlike a sales tax or a gas tax, consumers do not directly pay any tariffs. Tariffs are paid by importers, often large U.S. companies that are importing from their own foreign subsidiaries or foreign contractors. But businesses cannot raise their prices just because their costs or taxes go up. Sometimes they have to absorb the costs.

We have seen this recently with wages, which have been rising faster than inflation, which means costs are rising faster than prices. Conversely, the massive cut in corporate taxes enacted at the end of 2017 did not automatically translate into businesses slashing prices because their tax costs had fallen.

In addition, the Chinese currency has depreciated over the past year, which makes imports from China less expensive. And there is anecdotal evidence that Chinese manufacturers are slashing prices in an attempt to hold on to market share in the U.S.

No Inflation Despite Tariffs

The most recent evidence against what trade expert Alan Tonelson calls Tariffmageddon scaremongering comes from Thursday’s release of the producer-price index, which mostly measures the prices businesses receive for their goods and services. This rose a seasonally adjusted 0.2 percent in April from a month earlier, the Labor Department said. From a year earlier, the producer-price index increased by 2.2 percent. Both the monthly and annual increases were lower than expected and showed price increases decelerating from the prior month.

Prices for goods, less volatile food and energy categories, were unchanged in April. This is more or less the “tradeable sector” of the economy and the broadest category where tariffs would show up if they were to hit consumers. Compared with a year ago, prices were up just 1.8 percent.

What this suggests is that tariffs have not had a very big impact on prices in the U.S. That should not be very surprising. The metals tariffs have led to U.S. metals producers expanding capacity, which reduces the impact of taxes on imported metals. And a ten percent tariff on $200 billion of goods in our $20.5 trillion economy amounts to a 0.1 percent tax.

When the San Francisco Federal Reserve estimated the effect of tariffs on prices, they came to the conclusion that it had a 0.1 percent impact. But that may exaggerate the effect on consumers if businesses cannot pass on the cost of tariffs.

Durable goods, products purchased by consumers and businesses that are expected to last three-years or more, are a good place to look for signs of tariff-led inflation. The producer-price data shows that prices of raw materials used in durable fell 0.8 percent in April and are up just .17 percent from last April. Components for durable goods, the prices of parts that go into durables, were flat in April and are up 1.7 percent from a year ago.

The nondurable goods category is where we might see signs of the China tariffs. Materials prices here fell 1.5 percent in April from the prior month and are down 3.7 percent from a year ago. Parts fell 0.4 percent for the month and are up just 0.6 percent compared with a year ago.

Tariffs Haven’t Raised Prices of Planes, Trains, or Automobiles

What about specific items? Still no signs of tariff price pressure. Start with products that were predicted to rise in price because of the metals tariffs. Specifically, cars and trucks.

“U.S. President Donald Trump’s steel and aluminum tariffs will boost car prices by hiking commodity costs for manufacturers, automakers have warned,” Reuters reported last year.

That has not happened. Car prices rose 0.3 in April and are up just 1.2 percent from a year ago. Light truck prices fell 0.1 percent in April, the third straight monthly decline, and are up just 0.2 percent from a year ago. Heavy truck prices fell 0.1 percent also and are up just 1.4 percent from a year ago.

Car and truck parts? Up 0.3 percent in April and just 0.7 percent from a year ago. Campers and recreational trailers? Down 0.3 in April and up just 2 percent from a year ago.

Seeing a pattern yet? Let’s look at some heavy duty steel and aluminum products. Aircraft prices rose 0.2 in April and are up 2.1 percent from a year ago. That’s the highest annual price hike on the list so far but it is less than the overall rise in producer prices, indicating that this is not a tariff-led price hike. It’s also very close to the Federal Reserve’s target of 2 percent inflation.

The price of ships was flat in April. Compared with a year ago they are up just half a percentage point. Railroad equipment was flat in April and is up 2.7 percent for the year. That’s a bit high but keep in mind that railroad equipment is under-pressure from rising demand for shipping in the U.S.

Some of these metals heavy items, including auto parts and ships, are actually doubly subject to tariffs because they were hit by both metals tariffs and China tariffs.

Home Is Where The Heart Is…But Not Higher Prices

Furniture is one of the biggest categories of consumer items that were hit by the China tariffs. Household furniture prices, however, were up just 0.2 percent in April and 1.6 percent for the year. Soaps and detergents got the 10 percent China tariff but prices were up just 0.2 percent in April and 0.3 percent compared with a year ago.

A lot of categories of home electronic equipment were hit with the China tariff. Prices here were flat for the last two months, rose just 0.2 percent in January, and are up just 0.4 percent compared with last year.

A lot of the materials used in textile and clothing manufacturing in the U.S. got hit with China tariffs, including man-made textiles like rayon, nylon, and polyester. Synthetic fiber prices, however, fell 1 percent in April and are up 2.3 percent for the year. Yarn, thread, and finished fabric prices rose 0.1 percent in April. Yarn prices are down 0.8 percent for the year, while finished fabrics are up 3.3 percent.

And the tariffs on these are not pushing up prices for clothing or textile home furnishings. Women’s clothing prices fell 0.1 percent in April and are down 1.7 for the year. Men’s clothing prices rose 0.6 in the month and are up 1.5 percent for the year.

Margins Shrink But Prices Stay Low

Tariffs may have raised prices for businesses further out on the production chain but these are not getting passed on to consumers in the form of higher prices for final goods, according to the data. Most likely, businesses are aborbing the higher costs because they lack pricing power in the very-competitive user consumer market. Who wants to give up market share Jeff Bezos by hiking prices on store shelves?

Evidence for this in the producer-price index comes from a category called “trade services.” Unlike the rest of the index, which measures prices received, trade services is a measure of mark-ups, the difference between what a retailer or wholesaler paid for inventory and what they sold it for. Margins for China-tariffed TV, video, and photographic equipment are down 10.2 percent for the year. Furniture store margins are down 0.3 percent. Furniture wholesale margins fell 4.2 percent from a year ago. Hardware stores, which carry a lot of newly tariffed Chinese goods, saw margins rise just 0.6 percent.

If you go even further out in the supply-chain you can see even more evidence that tariffs have raised costs but not consumer prices, implying that businesses are effectively paying for the tariffs. Prices of steel mill products, which are an intermediate good used to produce consumer goods, are up a stiff 5.8 percent, almost certainly because of the higher cost of steel. Note however that this actually shows that prices have massively decelerated. In February, prices were up 12.6 percent compared with the year prior and in October they were up 18.6 percent. Prices for steel mill products fell 1.7 percent in April, held flat in March, and fell 3.2 percent in January.

It’s also likely that businesses have been better able to absorb the higher prices of imported goods or tariffed metals because last year’s massive cut in the corporate tax rate gave a big boost to after-tax profits. That softens the blow of a slight compression of pre-tax margins.

The Tariff Hoax Debunked

Economists and journalists alike often assume that the price of tariffs gets passed through to consumers but neither economic theory nor data support that assumption. On Friday, the government will release the latest consumer-price index data. That is expected to show a 2.1 percent rise, slightly higher than the prior month and in-line with the Federal Reserve’s 2 percent inflation target.

But do not be surprised if the Tariffmageddon crowd keeps ignoring the data. One other lesson from the past year’s experience with tariffs is that many economists and journalists appear to be immune to facts when it comes to the effects of tariffs, preferring to endlessly repeat the mantra that tariffs raise consumer prices.