"American consumers bore the costs of Trump’s tariffs"

 

On “Liberation Day” in April 2025, Donald Trump imposed a massive set of tariffs on imported goods from around the world. The federal government then collected those funds — raking in ten upon tens of billions of dollars — for nearly a year, until the Supreme Court ruled that the president had unconstitutionally usurped Congress’s taxation powers.

As a result, the federal government has now begun the process of refunding about $166 billion in illegal tax revenue — payable to the corporations that originally handed over the money to the U.S. Treasury. But did these corporations actually pay the tax? Or, after all, was it you and me?

In truth, the fat tax-rebate checks from the IRS will be going to corporations that already passed those costs on to shoppers in the form of tariff-bloated prices. American consumers paid the premium, but Treasury’s refunds will be going to huge companies. Ford announced it expects a $1.5 billion payback; General Motors anticipates a $500 million return. Both companies will reportedly be using the cash to boost their earnings.

Whether by incompetence or dark design, Trump’s illegal tariffs have worked like a reverse-Robin Hood scheme, on steroids. The pockets of the poor and middle classes were picked — during an affordability crisis, no less. And, following a detour through the IRS, that cash is now topping off the coffers of multinational corporations for whom the economy is already delivering record profits.

The economic ins and outs of tariffs, or import taxes, can be confusing at the best of times. And Donald Trump has added to that confusion with a constant stream of lies. To hear the addled president tell it, foreign countries pay the bulk of tariffs. But that is not true: A study by the New York Fed shows that foreign exporters absorbed only a small fraction of the costs of Trump’s tariffs. Instead, roughly 90 percent of the costs were paid by Americans.

An independent study by the Kiel Institute, a leading European economic think tank, pegs the cost paid by Americans even higher, at 96 percent. The report, titled “America’s Own Goal,” also illuminates how the costs of Trump’s tariffs, though initially paid by importers, are “ultimately” passed through to consumers via higher prices. The net effect of Trump’s tariffs, the study described, was to “transfer wealth from American consumers to the U.S. Treasury.”

In other words, American consumers bore the costs of Trump’s tariffs. The corporate importers were just the middleman. And yet, those same corporations are now in line to pocket the massive rebates from the Treasury, leaving consumers all the poorer.

To be plain: This isn’t a little bit of money around the edges. According to Congress’s Joint Economic Committee, the Trump tariff burden per household over the last year was about $1,700 — or more than the cost of one month’s groceries for a family of four.

In aggregate, that money could have supported important investments in the common good. Assume, conservatively, as the New York Fed found, that 90 percent of the $166 billion in tariff revenue was paid for by American consumers — or about $150 billion.

Below is a list of national expenditures that also each total about $150 billion:

37 Artemis II missions (at $4 billion a pop.)

20 years of funding for WIC — the nutrition program for infants and mothers

15 years of housing for everyone now in a homeless shelter

12 years of Head Start — the federally funded preschool program for disadvantaged kids

8 years of expanded SNAP or “food stamp” benefits (since cut under Trump’s “One Big Beautiful Bill”)

5 years of expanded Obamacare subsidies (also cut under Trump’s bill)

4 years of Pell Grants — the federal needs-based grants for college

1 year of funding for the Department of Transportation, to repair and revamp the nation’s highways, airports, and rail lines

Instead, all of that money will be boosting the bottom lines of American companies that rely on imports to run their businesses. According to an analysis by Citi Research, some of the biggest refunds are going to the likes of Walmart ($10.2 billion), Target ($2.2 billion), Nike ($1 billion), Kohl’s ($550 million), and Home Depot ($500 million).

Outside of a few shipping companies like DHL — which, for technical reasons, became the “importer of record” and tariff payor on behalf of other businesses — almost no companies are vowing any kind of rebate to consumers. (Costco, an outlier, has made a vague commitment to “find the best way to return this value to our members through lower prices and better values.”)

The net effect, then, of collecting and rebating Trump’s failed tariffs has been to create a massive transfer of wealth from normal people to already rich corporations. Forget “trickle-down.” This is hoover-up economics, and it is an outrage.

But surely the economic pain for everyday Americans must have served some greater patriotic policy purpose. Right? Not so much. Tariffs did not, as Trump promised, spark a domestic manufacturing boom — factory jobs in the U.S. have dropped by about 90,000. Tariffs also did not shrink the nation’s trade deficit in goods, which actually grew about 2 percent. The tariffs did, however, make life worse in other ways, primarily by goosing inflation. 

(Fed chair Jerome Powell recently blamed “elevated readings” in the nation’s inflation rate “largely” on “inflation in the goods sector, which has been boosted by the effects of tariffs.”) That, in turn, has kept the Federal Reserve from lowering interest rates, keeping everything from mortgages to car payments more expensive.

Perhaps it should not surprise us that Trump’s signature economic policy ended up being A) illegal and B) a massive giveaway to the already wealthy, at the cost of his base. But it is yet another reminder that the populism he applies to his agenda has never been more than a gloss. And that Trump has nothing but contempt for those who struggle — but will ever be the billionaire’s best friend.

Tim Dickinson is the Senior Political writer for The Contrarian

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