NO. NO, THEY ARE NOT.
When the President says foreign countries are paying billions to America through tariffs, there’s one massive problem: It’s not true.
Every time you hear claims about foreign money “flowing into” America through tariffs, you’re witnessing one of the most consequential economic misunderstandings of our time. The economic situation remains worse for regular Americans according to actual data. The payment of tariffs by American companies to U.S. Customs and Border Protection occurs when foreign goods enter American ports. Not China. Not Mexico. Not any foreign government. American businesses write the checks.
Donald Trump supports tariffs because he believes foreign governments must pay these charges. Importers who are American companies must pay all tariffs that come into effect. The actual system operations support this fact which makes it an irrefutable record. The $400 Chinese television must wait in a warehouse until someone gives U.S. Customs and Border Protection the $40 tariff before it can be put on sale. The American importer represents the only entity responsible for paying tariffs since foreign manufacturers do not pay them.
Your grocery expenses along with your shopping receipts demonstrate the economic impacts that have already emerged. The prices consumers find in stores experienced an inflation increase during the previous month because President Trump’s tariffs started to affect retail pricing. The Federal Reserve has revealed the extensive nature of what is to come according to its own analysis. The new tariffs will drive core PCE inflation to rise by at least 0.5 percentage points while the previous tariff proposal would have resulted in a maximum 2.2 percentage point increase in inflation according to our estimates. The actual financial burden on families proves devastating. The Yale University Budget Lab found that both short-term and long-term economic reduction occurred from the April 2nd tariffs which resulted in $1,254 and $1,588 average tax increases per U.S. household in 2025 and 2026 respectively. The hidden tax burden from price increases amounts to more than $1,200 annually for each consumer across all products including clothing, toys and food.
Companies face an impossible choice when tariffs hit. The two available options for companies facing tariffs are price increases that create extreme inflation or absorbing costs by reducing profits until bankruptcy becomes a risk. Most are choosing option one. Most businesses transfer their elevated expenses to their consumers by implementing price increases. According to economists, consumers generally become responsible for paying the costs of tariffs. The price of clothing increased by 1% in June which contributed to inflation during the month while apparel prices increased by 8% from the April 2nd tariff action and 17% from all US tariffs.
The United States’ trading partners remain passive observers to these developments. The countries are actively creating trade relationships which completely avoid the U.S. market. The global trade landscape is undergoing transformation through American tariffs yet this shift benefits neither America nor any other nation. The unintended consequence? American companies need to move their production facilities back to the United States at high costs while Chinese and Indian competitors seize the global market gaps we generate. The competitors will use other nations to circumvent our tariff system when selling their products.
The President has also started an ongoing conflict with the Federal Reserve. Trump has threatened to remove Jerome Powell from his position as Fed Chair while disputing the Federal Reserve’s independence. His goal? Force dramatic interest rate cuts while inflation is already rising from tariffs. The following economic disaster would occur if Trump achieved his goal to replace the Fed chair and reduce interest rates during an inflation surge. Cheaper borrowing rates motivate more debt-funded consumption at the same time rising product prices from tariffs reduce consumer purchasing power. When people take out more loans to purchase goods that lose value it leads to an economic collapse which might result in either a recession or depression. Interest rates function to limit inflation, but lower rates encourage business development alongside increased employment. Basic economic rules are broken when inflation rises while the Federal Reserve lowers interest rates because this creates the potential for unsafe economic deterioration.
The evidence is overwhelming and comes from multiple authoritative sources. The Yale Budget Lab finds that family purchasing power will decrease by $2,100-$3,800 annually because of tariffs. The Federal Reserve shows that tariffs have caused a 0.5-2.2 percentage point rise in inflation rates. The Tax Foundation found that average households must pay an extra $1,254-$1,588 because of tariffs. According to J.P. Morgan tariffs could push up consumer prices by 1-1.5% during this current year. Goldman Sachs economists predict that the direct costs of tariffs will be transferred to consumers through price increases to the extent of 70% in the long run.
Every time politicians state that foreign countries pay billions in tariffs to America you should remember that the real payers are American citizens. The tariff policy results in higher retail prices and decreased economic growth as well as a prolonged global position recovery that will need multiple decades. The tariff policy functions as a mechanism that shifts your wallet money to federal government funds while creating a major economic recession. Americans will be responsible for paying the expenses of the upcoming trade war through declining incomes because tariffs will drive up the costs of imported products.
The policy acts as a wealth transfer from American families to government coffers through deceptive economic nationalist rhetoric. The economic damage from this inflationary explosion combined with potential interest rate reductions threatens to impact future generations.
Two possible explanations exist regarding Trump’s tariff approach. The president demonstrates total economic ignorance by failing to grasp how Americans, rather than foreign nations, bear tariff expenses. He serves as a skilled manipulator who knows exactly how to use tariffs for stealing from the nation while restoring domestic manufacturing but at the cost of American citizens’ wallets and with his followers cheering him on for making foreign countries pay. The evidence points towards the latter interpretation which makes it even more disturbing.
People should worry about Trump’s actual plans for the money received from tariffs. The government received $27 billion in tariffs during June 2023 which represented four times more than June 2022 collection levels. The collected revenue from tariffs does not amount to enough funds to support either income tax payments or major government programs. The system functions as an inefficient method to extract money from American consumers while creating substantial economic problems.
Trump fails to inform his followers that the monthly revenue gains he celebrates will eventually decline. The implementation of tariffs will cause companies to either bring their manufacturing back to the United States or locate new suppliers elsewhere thus resulting in reduced import volumes. Less imports means less tariff revenue. The economic plan inflicts the greatest harm to families in America but only produces brief revenue gains that will vanish soon. The forced rapid and expensive manufacturing reshoring process will cause economic harm that will persist through several decades.
American consumers are already experiencing harm from tariffs which the available data clearly demonstrates. We need to determine the level of economic harm we will tolerate before we recognize that this policy is a scam because either the policymaker lacks economic knowledge or relies on public ignorance for implementing a historic American economic fraud.
-Rose McKay, Economics Correspondent for FUSA