The real cost of tariffs—why prices keep climbing
- Replies 0
Trade policies have a way of influencing more than just international markets—they often show up in everyday prices.
With new tariffs in place, many are questioning how these changes will trickle down to their wallets.
As businesses adjust and costs shift, one pressing question remains: where is all the money going?
The intent is to make foreign products more expensive, encouraging people to buy domestically made items instead.
However, as economists warn, US companies that rely on imports tend to pass at least part of these extra costs to consumers, driving up prices on everyday goods.
This is why tariffs are often labeled inflationary, as they directly impact the cost of living.
Trump's 25% tariffs on imports from Canada and Mexico and 20% tariffs on Chinese goods are adding up fast.
Research from the Peterson Institute for International Economics estimates that these tariffs could cost the average US household over $1,200 per year.
That’s because businesses, instead of absorbing the tax, increase their prices to offset the added expense—leaving consumers to pay the difference.
The money is paid by American importers and sent directly to the US Department of Treasury, where it enters the general government budget.
According to Felix Tintelnot, an economics professor at Duke University, this revenue can be used for virtually anything—including addressing the budget deficit, funding tax cuts, or supporting various government initiatives.
Looking at Trump’s first term, one clear example of how tariff money has been spent is the $28 billion in relief payments sent to US farmers.
These payments were meant to offset the financial hit farmers took when China retaliated against Trump’s tariffs by cutting back on US agricultural imports.
This pattern could repeat itself as new tariffs continue to reshape international trade.
The Committee for a Responsible Federal Budget estimates that if Trump’s tariffs remain in place, they could generate over $100 billion per year.
If extended long-term, they could bring in more than $1 trillion by 2035.
However, many economists warn that tariffs are an unreliable revenue source.
If prices rise too much, consumer spending could decline, leading to fewer imports—and less tariff money being collected.
The Peterson Institute for International Economics found that the lowest 20% of earners could see their incomes reduced by 2.7% due to tariff-driven price hikes.
Meanwhile, the top 1% would only experience a 0.6% loss, showing that lower-income Americans bear the biggest burden when prices go up.
“When you increase the price of goods and services, it’s harder for the poor to pay for them,” said Susan Ariel Aaronson, research professor of international affairs at George Washington University.
Stay informed about the latest tariff changes—here’s how they could be hitting your wallet.
From grocery stores to gas stations, the ripple effects of tariffs are still driving up costs for everyday Americans.
And now, with renewed discussions on trade policies, you might be paying even more at places like Target and Best Buy.
Have you noticed an increase in prices for certain goods? Do you think tariffs help or hurt American consumers? Share your thoughts in the comments below. Let’s discuss how these policies affect our daily lives and what we can do to stay ahead of financial challenges.
Also read:
With new tariffs in place, many are questioning how these changes will trickle down to their wallets.
As businesses adjust and costs shift, one pressing question remains: where is all the money going?
Understanding tariffs and why they matter
A tariff is essentially a tax on imported goods.The intent is to make foreign products more expensive, encouraging people to buy domestically made items instead.
However, as economists warn, US companies that rely on imports tend to pass at least part of these extra costs to consumers, driving up prices on everyday goods.
This is why tariffs are often labeled inflationary, as they directly impact the cost of living.
How much are Trump’s tariffs costing Americans?
Trump's 25% tariffs on imports from Canada and Mexico and 20% tariffs on Chinese goods are adding up fast.
Research from the Peterson Institute for International Economics estimates that these tariffs could cost the average US household over $1,200 per year.
That’s because businesses, instead of absorbing the tax, increase their prices to offset the added expense—leaving consumers to pay the difference.
Where does the tariff money actually go?
The billions of dollars collected in tariffs don’t just disappear.The money is paid by American importers and sent directly to the US Department of Treasury, where it enters the general government budget.
According to Felix Tintelnot, an economics professor at Duke University, this revenue can be used for virtually anything—including addressing the budget deficit, funding tax cuts, or supporting various government initiatives.
Looking at Trump’s first term, one clear example of how tariff money has been spent is the $28 billion in relief payments sent to US farmers.
These payments were meant to offset the financial hit farmers took when China retaliated against Trump’s tariffs by cutting back on US agricultural imports.
This pattern could repeat itself as new tariffs continue to reshape international trade.
Can tariffs actually increase government revenue?
The Committee for a Responsible Federal Budget estimates that if Trump’s tariffs remain in place, they could generate over $100 billion per year.
If extended long-term, they could bring in more than $1 trillion by 2035.
However, many economists warn that tariffs are an unreliable revenue source.
If prices rise too much, consumer spending could decline, leading to fewer imports—and less tariff money being collected.
Who is hit hardest by tariffs?
Tariffs don’t impact all Americans equally.The Peterson Institute for International Economics found that the lowest 20% of earners could see their incomes reduced by 2.7% due to tariff-driven price hikes.
Meanwhile, the top 1% would only experience a 0.6% loss, showing that lower-income Americans bear the biggest burden when prices go up.
“When you increase the price of goods and services, it’s harder for the poor to pay for them,” said Susan Ariel Aaronson, research professor of international affairs at George Washington University.
Stay informed about the latest tariff changes—here’s how they could be hitting your wallet.
From grocery stores to gas stations, the ripple effects of tariffs are still driving up costs for everyday Americans.
And now, with renewed discussions on trade policies, you might be paying even more at places like Target and Best Buy.
Also read:
Last edited:
