The One-Sentence Version
A tariff is a tax on imported goods paid by American companies to U.S. Customs, not by foreign countries, and study after study shows that cost gets passed directly to you at the register.
What Is a Tariff, Actually?
A tariff is a tax on goods coming into the country. The mechanics are straightforward:
- An American company orders products from overseas — steel from South Korea, electronics from China, wine from France
- When those goods arrive at a U.S. port, U.S. Customs charges a tax based on the product type and country of origin
- The American importer writes the check — to U.S. Customs, a U.S. government agency
- The importer then decides: absorb the cost (cutting their own profit), or pass it to the next buyer in the supply chain — the distributor, the retailer, and eventually you
At no point in this process does a foreign government write a check to the U.S. Treasury. The tax is collected from American businesses on American soil.
What Trump Says vs. What the Data Shows
Trump’s claim
“Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens.” (Inauguration Day 2025)
In a January 2026 Wall Street Journal op-ed, Trump wrote that the tariff burden “has fallen overwhelmingly on foreign producers and middlemen.”[5]
What the research actually found
| Study | Who Pays? |
|---|---|
| Federal Reserve Board of Governors (April 2026) | Tariffs caused “the entirety of the excess inflation in core goods.” Full dollar-for-dollar pass-through to consumers. Without tariffs, prices would have fallen below pre-pandemic levels.[1] |
| NY Fed / Columbia University (Feb 2026) | Americans bore ~90-94% of tariff costs in 2025[2] |
| Congressional Budget Office | Foreign exporters bear only ~5% of costs; 95% falls on American firms and consumers[3] |
| Fed Chair Jerome Powell (March 2026) | Confirmed tariffs account for 0.5-0.75 percentage points of the 3% core inflation rate |
| Duke/NBER wine study | On European wines, consumers paid 134% of the tariff amount — more than the tariff itself — because markups compound at each step[4] |
The wine study illustrates an important detail. A $1.19-per-bottle tariff resulted in consumers paying $1.59 more — 134% of the tariff amount.[4] Each middleman in the supply chain marked up the higher cost, so the final price increase exceeded the tariff itself.
CNN fact-checked Trump’s WSJ op-ed and found it “littered with false claims.”[5] The study Trump cited in the op-ed actually concluded the opposite of what he claimed.[5]
Trump’s own Treasury Secretary, before joining the administration
Scott Bessent wrote in a January 2024 investor letter: “Tariffs are inflationary and would strengthen the dollar — hardly a good starting point for a US industrial renaissance.”
When Rep. Maxine Waters asked about the letter under oath on February 4, 2026, Bessent initially denied it. When Rep. Sean Casten subsequently confronted him with the actual text, Bessent shifted to saying he “was mistaken” about tariffs being inflationary.
What Do the Tariffs Actually Cost You?
Your groceries
Tariffs on agricultural inputs — fertilizer, machinery, packaging — have raised costs throughout the food supply chain. Fertilizer is up 10-15%, with tariffs adding approximately $100 per ton.[6] Farm operating costs are projected 4% higher for corn and 6% higher for soybeans.[6] The gap between what it costs farmers to grow food and the prices they receive hit a 10-year high.[6]
Your home
For most families, housing is where the tariff impact adds up fastest.
- Building material costs have surged: steel up 21%, copper up 25%, lumber tariffs totaling 45%[7]
- The National Association of Home Builders estimated $7,500-$10,000 in additional costs per new home[7]
- The Center for American Progress estimated $17,500 per home (using Urban-Brookings Tax Policy Center data) and projected 450,000 fewer homes built through 2030[8]
- 60,000 fewer construction jobs as of February 2026 vs. December 2024[8]
Your car
- Auto industry tariff costs: $30 billion in 2025[6]
- Imported vehicles: $5,000-$8,900 more per vehicle[6]
- Domestic vehicles: $1,600-$2,000 more (because tariffs raise the cost of steel and parts that go into American-made cars too)[6]
- Average new vehicle list price (MSRP): up 10.4% (Kelley Blue Book); actual transaction prices rose 5.9% after incentives[9]
Your appliances
Trump’s first-term washing machine tariffs are a case study in how tariffs actually work:
- Washing machines cost $86-$92 more per unit (12% increase)[10]
- Total cost to consumers: $1.5 billion per year — for one product[10]
- Jobs created: 1,800[10]
- Cost per job created: $815,000 (American Enterprise Institute / University of Chicago)[10]
- Dryer prices also rose $92 — even though dryers weren’t tariffed — because manufacturers raised both prices together[10]
Consumers paid $815,000 in higher prices for each manufacturing job that paid $40,000-$60,000 — a ratio of more than 10 to 1.[10]
Your overall household budget
- Yale Budget Lab: ~$1,400-$1,700 per household in additional costs in 2025[11]
- Tax Foundation: ~$1,500 per household average[6]
- The distribution is regressive: the bottom 10% of households pay 1.1-1.9% of their after-tax income in tariff costs, while the top 10% pay only 0.4-0.6% — roughly a 3x disparity[11]
What Specific Tariffs Has Trump Imposed?
The average effective U.S. tariff rate went from 2.5% to approximately 27% between January and April 2025 — the highest in over a century.[6] Key actions:
| Date | Action | Rate |
|---|---|---|
| Feb 2025 | Tariffs on Canada (citing fentanyl) | 25% on goods, 10% on energy |
| Feb 2025 | Tariffs on Mexico | 25% |
| Feb 2025 | Additional tariffs on China | 20% on top of existing tariffs |
| Mar 2025 | Steel and aluminum | 25% |
| Apr 2, 2025 | ”Liberation Day” — 10% baseline on ALL countries, higher for specific ones | China 34%, EU 20%, Vietnam 46%, Japan 24% |
| Jun 2025 | Steel and aluminum doubled | 50% |
| Aug 2025 | Automobiles | 25-50% |
| Feb 2026 | Supreme Court struck down main tariffs as unconstitutional (6-3) | Trump immediately imposed new tariffs under a different law |
| Apr 2026 | Pharmaceuticals | 100% (0% for companies that “negotiate” with the White House) |
Other countries retaliated. Canada imposed 25% tariffs on $155 billion in U.S. goods. China tariffed U.S. coal, oil, and farm equipment. The EU targeted $84 billion in U.S. products.[6] By September 2025, retaliatory tariffs affected $223 billion of U.S. exports — hitting American farmers especially hard.[6]
The “Liberation Day” math was wrong
The conservative American Enterprise Institute found that the administration’s tariff formula contained a mathematical error that inflated rates by approximately 4x.[12] They used the wrong economic variable. Corrected, Vietnam’s tariff would have been 12.2%, not 46%.[12]
What Do Economists Say? (Including Conservatives)
Opposition to these tariffs crosses ideological lines. Conservative, libertarian, and liberal economists largely agree:
Conservative and libertarian critics:
- American Enterprise Institute (conservative): Called the tariff formula having “no foundation in either economic theory or trade law.”[12] Found the math error.[12] Calculated the washing machine tariff cost $815,000 per job.[10]
- Cato Institute (libertarian): Called Trump’s tariff plan “economically ignorant, geopolitically dangerous, and politically misguided.”[14]
- Wall Street Journal editorial board (conservative): Called them “the dumbest trade war in history” and “the dumbest tariff plunge.” Repeatedly editorialized against them.[15]
- Reason magazine (libertarian): Reported the Federal Reserve study showing tariffs caused “the entirety of excess inflation.”[13]
Trump’s own economic advisors were split:
- Kevin Hassett, Trump’s NEC Director, responded to the Fed study not by disputing the data — but by demanding the Fed researchers be “disciplined” for publishing it.[13]
- Gary Cohn, Trump’s first-term NEC Director, actively opposed tariffs and eventually resigned over them.
Over 1,000 economists signed letters opposing the tariffs. Nobel laureates described them as “monstrously destructive."
"But Don’t Tariffs Bring Manufacturing Back?”
This is the strongest argument for tariffs, and the evidence on it is mixed.
Where tariffs have worked
Steel: U.S. steel production has genuinely increased. New plants are being built in West Virginia, Arkansas, and South Carolina. The U.S. became the third-largest steel-producing nation. If your only goal is to produce more domestic steel, the tariffs worked.
The catch
Steel is an input for almost everything else. Cars, buildings, appliances, bridges, infrastructure. Protecting 80,000 steel production jobs raises costs for the millions of workers in industries that use steel. Every study of broad tariffs (as opposed to narrow, product-specific ones) finds they destroy more jobs downstream than they create upstream.
The broader manufacturing data tells a different story:
- Since “Liberation Day” (April 2025): 72,000 manufacturing jobs lost in the following 8 months[16]
- Trump’s first year in his second term: manufacturing lost 108,000 jobs (Joint Economic Committee)[16]
- Manufacturing as a share of GDP shrank from 11% to 9.4% between 2018 and mid-2025[6]
- The Cato Institute published research titled: “Trump’s First-Term Tariffs Crushed US Manufacturing”[14]
Tariffs protected some specific industries while costing more jobs in the downstream industries that depend on those same materials.
The Historical Warning
The last time the U.S. tried tariffs this aggressively was the Smoot-Hawley Tariff Act of 1930. It triggered retaliatory tariffs from trading partners, global trade collapsed by 65%, and it deepened the Great Depression.
Trump’s April 2025 tariff framework raised the average effective rate to 22.7%, surpassing Smoot-Hawley’s effective rate.[6] Retaliatory tariffs from Canada, China, and the EU are already affecting $223 billion in U.S. exports.[6]
Who Actually Benefits?
| Winners | How |
|---|---|
| U.S. steel producers | New plants, increased production |
| Federal revenue | $195 billion collected in FY 2025[6] |
| Companies with all-domestic supply chains | Competitors’ imports are now more expensive |
| Losers | How |
|---|---|
| Every American consumer | Higher prices on nearly everything[1][2] |
| Low-income families | Pay 3x more as a share of income[11] |
| Homebuyers | $7,500-$17,500 more per new home[7][8] |
| Car buyers | $1,600-$8,900 more per vehicle[6] |
| Farmers | Higher input costs + lost export markets from retaliation[6] |
| Manufacturing workers | 72,000+ jobs lost since Liberation Day[16] |
| Construction workers | 60,000 fewer jobs[8] |
What the Evidence Shows
A tariff is a tax paid by American importers to U.S. Customs. The cost is passed to American consumers. This is confirmed by the Federal Reserve[1], the Congressional Budget Office[3], the New York Fed[2], Columbia University[2], the American Enterprise Institute[10][12], the Cato Institute[14], and the Wall Street Journal editorial board[15].
The administration says foreign countries pay. The Federal Reserve’s data shows otherwise.[1]
What Happened After the Supreme Court Struck Down the Tariffs
In February 2026, the Supreme Court ruled that the tariffs Trump imposed under the 1977 International Emergency Economic Powers Act were unconstitutional. The Court found Trump exceeded his statutory authority. Approximately $166 billion in tariffs had been collected from U.S. importers by that point.
After the ruling, U.S. Customs and Border Protection set up a refund claims portal, which opened on April 20, 2026. Affected companies are entitled to recover what they paid.
On April 21, in a CNBC Squawk Box phone interview, Trump told companies they should not seek the refunds. Asked specifically about Apple and Amazon, who had not filed for reimbursement, Trump said it would be “Brilliant if they don’t do that.” He added: “If they don’t do that, I’ll remember them.”
Companies that file legitimate refund claims are exercising a court-recognized right against the federal government. A presidency that publicly conditions its administrative cooperation, regulatory decisions, and procurement awards on private parties forfeiting court-ordered remedies is, by design, a presidency that is undermining the rule of law it is sworn to faithfully execute. As of late April, large firms including Apple and Amazon had not filed for refunds, with sources citing fear of “offending” Trump as a reason.
The Replacement Tariffs Were Also Blocked
The same day the Supreme Court struck down the IEEPA tariffs in February 2026, the administration invoked a different legal authority — Section 122 of the Trade Act of 1974 — to keep the same tariffs in place. Section 122 had never before been used to impose broad tariffs. Treasury Secretary Scott Bessent told reporters at the time that the administration expected the tariffs to remain in effect “within five months” while the legal questions were sorted out.[17]
On May 7, 2026, the U.S. Court of International Trade ruled 2-1 in Burlap and Barrel, Inc. v. Trump that the Section 122 tariffs were also unlawful. The plaintiffs were a New York spice importer (Burlap and Barrel), a Florida toy manufacturer, and the State of Washington. The court found that Section 122 authorizes the president to address balance-of-payments problems through tariffs of up to 15 percent for no more than 150 days — not the open-ended, across-the-board tariffs the administration had imposed. The court also cited Bessent’s “within five months” admission as evidence the administration itself had treated the authority as a temporary stopgap.[17]
The administration appealed the next day, May 8.[17]
According to Treasury Department data, U.S. Customs has collected approximately $190 billion in tariff revenue between October 2025 and April 2026 under Section 122. If the appeals court upholds the trial-court ruling, that money is potentially refundable to the U.S. importers who paid it.[17]
What the Tariffs Have Done to American Farmers
The Economist’s April 27, 2026 reporting documents what farm-belt economists have been saying for months: the cumulative impact of the tariffs on U.S. agriculture is the worst sustained downturn since the 1980s farm crisis.
- Soybean exports to China through March 19, 2026: 11.2 million metric tons, roughly half the 21.8 million tons exported in the same period the prior year. China responded to the tariffs with retaliatory tariffs of its own and, for several months, imported zero U.S. soybeans. Brazil and Argentina filled the gap.
- Farm bankruptcies rose 46% in 2025 to 315 Chapter 12 filings — the highest rate since 2020 and the third consecutive annual increase.
- 15,000 American farms disappeared in 2025 alone, dropping the total farm count from over 2 million in 2018 to roughly 1.9 million today.
- Agricultural economists estimate U.S. farmer losses on this year’s crop at $35 billion to $43 billion.
- A separate May 2026 estimate put the China-specific loss at nearly $15 billion. Drawing on North Dakota State University’s Agricultural Trade Monitor, the libertarian magazine Reason found that annualized U.S. farm exports to China fell by close to $15 billion between March 2025 and February 2026. Soybeans alone dropped from about $12 billion in 2024 to $3 billion in 2025, with corn, wheat, and pork also hit, and Iowa farmers lost roughly $1.2 billion in China-bound sales. U.S. duties on Chinese goods had climbed from 20% to as high as 135% before easing to about 50%, and China answered with farm tariffs as high as 147%. The study noted that it measures lost sales to China specifically, not necessarily lost exports overall.[20]
Sam Watson, a Republican Georgia state senator and farmer interviewed by the Economist, returned home to plant what he reckons may be his last harvest. “We used to just pray for rain. Now we’re praying on geopolitics, too.”
Trump’s first-term tariff bailouts paid farmers $28 billion in market-facilitation payments, and according to USDA data more than three-quarters of those payments went to large operations. For the current downturn, the administration announced a smaller package on December 8, 2025: the Farmer Bridge Assistance Program, up to $11 billion for row-crop growers plus $1 billion for specialty crops, with soybean farmers set to receive $30.88 per acre and payments beginning in February 2026.[21] That total sits well below the $35 billion to $43 billion in estimated losses for this year’s crop.
The Latest Inflation and Tourism Data
In late May 2026, two new data sets connected the tariffs to the broader economy.
April PCE inflation: a three-year high. The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures price index, rose to 3.8% year over year in April 2026, the highest reading in three years. Core PCE, which strips out food and energy, came in at 3.3% annually, the biggest jump since November 2023. The Bureau of Economic Analysis released the data on May 28, 2026.[18] CNN’s analysis attributed the surge to two compounding sources: ongoing tariff pass-through to consumer prices, and the oil-price shock from the Iran war that pushed Brent crude past $100 per barrel through April. Households are responding by depleting personal savings at the fastest rate since 2022.[18]
International tourism to the U.S.: 4 million fewer visitors. CNN reported on May 25 that foreign visitors to the United States fell by 4 million in 2025 compared with 2024, a drop of more than $8 billion in foreign visitor spending. It was the first real year-over-year decline in U.S. inbound tourism since the COVID-19 pandemic, and the drop is larger in absolute terms than the one during the 2008 global recession. International travel globally grew by 80 million people in 2025; the United States is the outlier. Tariffs on Canada drove Canadian visits to the United States down 17%, with Las Vegas posting the steepest U.S.-side decline.[19]
Sources
1. Federal Reserve: Detecting Tariff Effects on Consumer Prices in Real Time, Part II (April 8, 2026)
2. NY Fed: Who Is Paying for the 2025 U.S. Tariffs? (Feb 2026)
3. Congressional Budget Office analysis of tariff cost distribution
4. Duke/NBER: Wine Tariff Study — Consumers Paid 134% of Tariff Amount
5. CNN fact-check of Trump’s January 2026 Wall Street Journal op-ed
6. Tax Foundation: Trump Tariffs Trade War Tracker
7. NAHB: How Tariffs Impact Home Building
8. Center for American Progress / Urban-Brookings Tax Policy Center housing cost analysis
9. Kelley Blue Book vehicle pricing data
10. AEI: Washing Machine Tariffs — $815,000 Per Job (2019)
11. Yale Budget Lab: Fiscal and Distributional Effects of All U.S. Tariffs (2025)
12. AEI: Trump’s Tariff Formula — Mathematical Error (April 2025)
14. Cato Institute tariff analysis and “Trump’s First-Term Tariffs Crushed US Manufacturing”
15. Wall Street Journal editorial board tariff commentary
16. Joint Economic Committee manufacturing employment data
17. U.S. Court of International Trade, Burlap and Barrel, Inc. v. Trump (May 7, 2026); administration notice of appeal (May 8, 2026)
18. CNN Business: Inflation is at a three-year high — and now many Americans are burning through their savings (April PCE data, May 28, 2026) and Bureau of Economic Analysis: Personal Consumption Expenditures Price Index
19. CNN: Tourism to the US dropped — The impact of how the world perceives America (May 25, 2026) and Daily Beast: Tourists Boycott U.S. at Record Rates After Trump Takeover
20. Reason: Trump’s Trade War Caused a $15 Billion Decline in U.S. Farm Sales to China (May 27, 2026)
21. USDA: Trump Administration Announces $12 Billion Farmer Bridge Payments (Dec 8, 2025) and Fortune: Trump’s $12 billion farmer bailout is a ‘Band-Aid on a bigger wound’ (Dec 9, 2025)