77-96% of Tariffs Hit American Consumers

Tariff policies under President Trump are falling short, failing to support ambitious spending goals and leaving Americans with the bill.

Story Highlights

The Trump administration’s spending plans face a $6 trillion shortfall.
Tariffs collected only $264 billion in 2025, far from what’s needed.
American consumers and businesses bear 77-96% of tariff costs.
Small businesses face significant financial strain due to tariffs.

Tariff Revenue Falls Short of Ambitious Spending Plans

In 2025, the U.S. Treasury reported collecting $264 billion from tariffs, yet this falls drastically short of the $6 trillion needed to fund President Trump’s ambitious spending proposals. These plans include deficit reduction, income tax replacement, military expansion, and rebate checks, which have been deemed mathematically impossible to achieve with current tariff revenues. The Washington Post, leveraging a Cato Institute analysis, has highlighted this significant gap, raising concerns about the feasibility of these fiscal goals.

Critics argue that the administration’s reliance on tariffs as a primary revenue source effectively taxes American consumers and businesses. Studies from the NBER, Kiel Institute, and Goldman Sachs estimate that between 77-96% of these costs are borne domestically, contradicting the notion that tariffs are funded by foreign entities. This domestic burden has been visualized through Cato’s tariff spending tracker, which illustrates the mismatch between revenue and spending needs.

Impact on American Businesses and Consumers

The impact of tariffs on American businesses is stark, with small businesses facing an average of $25,000 in additional costs per month. This financial strain is exacerbated by the ongoing challenges of high consumer goods prices and increased production costs in manufacturing and agriculture. The 2025 tariff escalations, dubbed “Liberation Day,” have intensified these challenges, leading to increased operating expenses for many businesses across the country.

While the administration promotes tariffs as a tool to generate revenue without increasing income taxes, the reality on the ground tells a different story. The inflated costs for goods and services due to these tariffs are felt most keenly by small businesses and middle-class consumers, who see little relief despite promises of rebate checks and tax cuts.

Fiscal and Political Ramifications

The ongoing reliance on tariffs and the resulting economic pressures undermine the Trump administration’s credibility in managing fiscal policy effectively. The ambitious proposals for military expansion and the “One Big Beautiful Bill Act” face significant hurdles as the arithmetic of tariff revenue falls short. Without a viable alternative revenue stream, these plans risk perpetuating existing deficits rather than alleviating them.

Washington Post Confirms That Tariffs Can’t Fulfill Trump’s Spending Ambitions https://t.co/vOnC2ZnKaZ via @CatoInstitute pic.twitter.com/l9zcA4sgtM

— Michael Chapman (@MWChapman) January 26, 2026

The political implications are equally concerning, as the administration’s narrative of foreign-funded tariffs is challenged by domestic economic realities. The gap between rhetoric and reality raises questions about the sustainability of such policies in the long term, placing further pressure on the administration to explore alternative fiscal strategies.