The 90% Truth About Tariffs That Politicians Won't Tell You

When Donald Trump promises to slap 60% tariffs on Chinese goods and 20% on everything else, he sells it as foreign countries paying America. The New York Federal Reserve just dropped a reality check: US businesses and consumers foot 90% of the bill.

This isn't economic theory—it's hard data from Trump's first-term tariff experiment. And it reveals an uncomfortable truth about who really pays when politicians play protectionist.

The Tariff Shell Game: Follow the Money

Here's how tariffs actually work, stripped of political spin.

When the US imposed an average 21% tariff on Chinese goods in 2018-2019, economists expected some cost-sharing. Chinese exporters should have lowered their prices to stay competitive, while US importers absorbed the rest through higher costs.

Instead? Chinese exporters barely budged on pricing. American importers paid the full tariff freight. And where did those costs go? Straight to consumers through higher prices.

Walmart and Target have already warned they'll raise prices if Trump's new tariff plans take effect. They're not being dramatic—they're being realistic about basic economics.

The $400 Billion Question

Trump's proposed tariffs could generate up to $400 billion annually in government revenue. Sounds like a windfall, right?

Wrong. That's $400 billion coming out of American wallets—roughly $3,000 per household annually, according to economic estimates. It's essentially a massive consumption tax disguised as foreign policy.

The cruel irony? Tariffs hit hardest where it hurts most. Lower-income families spend a larger share of their income on goods, making tariffs a regressive tax that punishes those least able to afford it.

Winners and Losers in the New Trade War

Not everyone loses from tariffs. Some US manufacturers could benefit from reduced foreign competition. Steel producers, for instance, saw profits surge during Trump's first-term steel tariffs.

But the math is brutal for everyone else. The New York Fed study found that tariff-protected industries gained $3.2 billion in profits, while consumers paid $51 billion more for goods. That's a 16-to-1 ratio of consumer costs to industry benefits.

Meanwhile, US exporters get hammered by retaliatory tariffs. American farmers lost billions when China retaliated against Trump's trade war. Soybean exports to China plummeted 94% at one point.

The Political vs Economic Reality Gap

Politicians love tariffs because they sound tough on foreign competition. "Make other countries pay!" resonates with voters feeling squeezed by globalization.

But economics doesn't care about political messaging. When you tax imports, you're taxing your own consumers. When you protect domestic industries, you're subsidizing them with higher prices for everyone else.

The New York Fed's research isn't partisan—it's mathematical. Trade protection comes with a price tag, and that tag reads "Made in America, Paid by Americans."

The real test isn't whether tariffs can generate government revenue. It's whether voters will accept paying $3,000 more per year for the privilege of "winning" a trade war.