In fact, Treasury Secretary Scott Bessent went so far as to say he wasn’t concerned about the 20% increase the White House had placed on imports from China, saying the nation “will pay for the tariffs because their business model is exporting their way out of this inflation. They will eat any tariffs that go on.”

Likewise, Commerce Secretary Howard Lutnick hinted that retaliatory tariffs from Canada and Mexico wouldn’t come to fruition, as “they have so much more that they sell to us than we sell to them.”

He added: “It’s not even close, this is not a battle that we’re ever going to lose. The president knows it, he does have the cards, and he’s going to protect Americans.”

If Lutnick was betting there would be little or no retaliation, it hasn’t paid off. Canada has since responded with a 25% hike of its own on American exports, with Mexico adding it will announce tariff and non-tariff rebuttals later this week.

China also whacked 15% onto imports of key U.S. farm products, including chicken, pork, soy, and beef, as well as expanding controls on doing business with U.S. companies.

Raising consumer prices

It seems the back-and-forth will raise prices for consumers, a further burden on purse strings which have already been stretched over the past few years by inflation and tight interest rates.

Hopes that overseas businesses would absorb the hike—or that domestic businesses facing higher supply costs would do the same—now seem to be overly optimistic.

Execs told EY the costs incurred because of tariffs would largely be passed back to customers: In fact, 31% of respondents said they’d be pushing 90%+ of the burden back to shoppers.

The survey of more than 4,000 executives, first reported by CNBC, found the vast majority (72%) plan to pass at least 50% of the costs back to their customers.

Moreover, 46.2% of the thousands of bosses surveyed added they’d be passing on a minimum of two-thirds of the increase to their baseline—and not a single business said it would absorb all of the costs.

While some delays have been made for Mexico and Canada’s auto industry, the moves aren’t enough for businesses to bet against tariffs coming in over the medium term.

“Businesses today, they don’t care about whether the tariffs are coming tomorrow or in a week—they’re preparing [and] trying to build resilience,” EY-Parthenon chief economist Gregory Daco told CNBC. “But doing that has a cost and is inflationary in and of itself. Uncertainty deters economic activity.”

The tariff tooth fairy

The EY report adds a further dose of realism to the ongoing trade war, after the likes of Warren Buffett and Steve Cohen previously flagged that ultimately consumers would bear the brunt of tit-for-tat tariffs.

Berkshire Hathaway CEO Buffett, for example, distances himself from political and economic commentary—likely aware of the enormous influence he has over the markets.

But even he was drawn to speak on tariffs generally, telling CBS in an interview released Sunday: “Tariffs are actually—we’ve had a lot of experience with them. They’re an act of war, to some degree.

“Over time, they are a tax on goods. I mean, the tooth fairy doesn’t pay ’em.”

Likewise Steve Cohen, worth $14.8 billion courtesy of his ownership of Point 72 Asset Management—as well as the New York Mets—said his outlook has turned negative because of tariffs and immigration policy.

He told the FII Priority conference in Miami late last month: “Tariffs cannot be positive, I mean it’s a tax. And you can imagine tit for tat if the U.S. does something—it implements a tax on somebody—somebody else is going to perhaps raise the stakes and raise their tax back. Taxes are never positive.”