By delaying import tariffs on iPhones and other popular electronics made in China, the Trump administration has finally admitted that duties on foreign imports can hit the wallets of American businesses and consumers — and maybe even hurt the president’s reelection chances.

For months White House officials have claimed China was paying almost the full cost of U.S. tariffs on hundreds of billions of dollars in largely industrial imports. Yet President Trump admitted on Tuesday when he postponed a new 10% tariff on some $150 billion in Chinese-made consumer goods that he was worried about the harm it would do during the holiday shopping season.

“We’re doing this for Christmas season, just in case some of the tariffs would have an impact on U.S. customers,” Trump said after the White House decision.

Read:Trump delays tariffs on Chinese-made laptops, iPhones and toys

Who is paying the cost of the tariffs is a matter of dispute, but there’s no question American businesses and consumers are bearing some — perhaps even most — of the burden. To understand why it helps to know how tariffs work.

Tariffs are collected by U.S. customs officials when imports reach an American port or an entry point on the Canadian or Mexican border. They are paid by the business that accepts the foreign shipment, usually a U.S. wholesaler or a company such as Apple AAPL, +3.75% , Amazon AMZN, +2.49% , Dell DELL, +0.53% or General Electric GE, +0.99% .

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These U.S.-based wholesalers or companies have paid $57 billion in customs duties to the federal government through the first 10 months of the current fiscal year, Treasury figures show. That’s up 75% from a year earlier.

Where does the money come from? U.S.-based firms can draw have several potential sources.

First they can ask Chinese suppliers to lower their prices, basically swallowing some or all of the cost of the U.S. tariffs.

So far there’s been little indication Chinese suppliers have cut prices. The cost of Chinese imports have declined 1.6% in the past year, but that’s not enough to offset U.S. tariffs ranging up to 25% on $250 billion worth of goods.

The next step U.S. companies and wholesalers can take is to try to pass the costs of tariffs onto customers by raising prices. That is what has the White House worried.

Let’s take Apple as an example. The company pays a wholesale price of about $450 for each iPhone XS that enters the U.S. from China, industry estimates suggest. A 10% U..S. tariff would raise Apple’s cost by $45 per phone.

The XS generally sells for around $1,000 retail. Apple would have to raise the price tag to about $1,050 to maintain the same level of profits as it earns now if the 10% tariff had gone into effect.

If customers balk at buying a more expensive XS, however, Apple might have to keep prices the same. And the evidence suggests price-conscious Americans remain resistant to paying more.

The result would be lower profits and possibly a lower stock price. Indeed, Apple’s stock fell sharply after the White House originally announced the new 10% tariff on Aug. 1.

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That’s the dilemma all companies importing goods from China confront. Adjusted pretax corporate profits, coincidentally or not, have fallen two quarters in a row after the trade fight between the U.S. and China intensified.

There is one more complicating factor that may be offering U.S. companies some relief — but at the expense of the Trump administration’s get-tough-on-China strategy.

The U.S. dollar has strengthened, given American companies more buying power. And the value of the Chinese yuan has fallen as much as 10% in the past year. That may have helped to limit the impact of tariffs on American firms while allowing Chinese companies to maintain sales in the United States.

The White House, in fact, accused China of purposely letting its currency fall in value to shield its companies from U.S. tariffs. The U.S. last week officially labeled China as a currency manipulator for the first time in 25 years.

The delay in tariffs on popular consumer goods doesn’t lessen the tension, however. The move was not an olive branch to China so much as political cover for Trump as he gears up for re-election. Hardly anyone on Wall Street expects a deal anytime soon.

“It’s clear that a U.S.-China trade deal is increasingly unlikely this side of the U.S. presidential election in November 2020,” said chief U.S. economist Paul Ashworth of Capital Economics.