The tariffs currently under review by the Supreme Court are generating substantial revenue for the U.S. federal government, amounting to tens of billions of dollars. However, they are also triggering economic strain, affecting consumers, complicating operations for businesses, and undermining the very domestic manufacturers they aim to support.
According to economists at Yale’s Budget Lab, the average tax on imported goods now stands at nearly 18%, a sharp increase from the 2.4% recorded before Donald Trump resumed office. The Treasury Department is collecting almost four times more tariff income compared to the previous year. Without the so-called “emergency tariffs” under judicial scrutiny, the average rate would be closer to 9%.
Despite assertions from the administration that foreign exporters bear the cost, the financial burden primarily falls on American importers. Ultimately, much of this expense is transferred to U.S. consumers through elevated prices. Patrick Allen, an Ohio-based wine importer, described the mechanism plainly: “It’s a tax. And it gets built into the price everybody is paying for goods.”
Inflation has shown signs of upward movement, particularly in sectors like clothing and furniture where import dependency is high. In September, annual inflation reached 3%, up from 2.3% in April when the broad tariff policy was first announced. While this remains below the 9% peak seen during the post-pandemic period and after Russia’s invasion of Ukraine, it signals renewed pressure on household budgets.
Federal Reserve officials anticipate that the price increases caused by tariffs will be a one-time adjustment as they move through supply chains, rather than a persistent driver of inflation. Still, the volatility in tariff rates—ranging from 30% to over 100%—has disrupted planning for importers who typically order inventory months in advance.
An unnamed computer manufacturer, cited in a recent Institute for Supply Management report, described the situation as creating “havoc and uncertainty.” Despite the higher costs of imports, domestic production has not significantly increased. In fact, factory employment has declined by over 40,000 since April, and the ISM manufacturing index has contracted for eight consecutive months.
A machinery plant manager noted that many imported products lack viable domestic alternatives, making reshoring efforts ineffective. “Overall, prices on all products have gone up, some significantly. We are trying to keep up with the wild fluctuations and pass along what costs we can to our customers,” the manager said.
Legal challenges to the emergency tariffs argue that the president has overstepped his constitutional authority. The administration has relied on a 1970s-era law intended for economic emergencies, which does not explicitly authorize tariffs. Lower courts have ruled that applying this statute to impose widespread import taxes exceeds legislative intent.
The White House has warned that invalidating the tariffs could severely damage the economy, claiming in its Supreme Court brief that “America could go from strength to failure the moment such an incorrect decision took effect.” However, tariffs accounted for only 6% of total government revenue in September, and the rise in tariff income was offset by a drop in corporate tax receipts.
Even if the Supreme Court strikes down the current tariffs, Trump retains other legal avenues to impose import duties through statutory powers granted by Congress. Kathleen Claussen, a trade law professor at Georgetown University, believes the president could reconstruct a similar policy framework using alternative legal authorities. “I think in the end, he could piece together something very close to — if not identical to — what he’s done so far,” she said, though future legal disputes remain possible.
— news from NPR
— News Original —
Yes, Trump’s tariffs are raising billions — but at a steep economic cost
The tariffs at the heart of this week ‘s Supreme Court case are raising tens of billions of dollars for the federal government. They ‘re also costing consumers, frustrating businesses and hurting the manufacturers they ‘re supposed to help. n nThe average tax on U.S. imports today is nearly 18%, according to economists at the Budget Lab at Yale — up from 2.4% before Trump returned to the White House. The Treasury Department is collecting almost four times as much tariff revenue now as it was a year ago. The average tariff rate would be closer to 9% were it nor for the “emergency tariffs” the Supreme Court is reviewing. n nDespite the administration ‘s repeated claims that foreign suppliers are paying the tariffs, most of the bill is being paid by U.S. importers. And ultimately, at least some of the tab will be passed along to American consumers in the form of higher prices. n n”It ‘s a tax,” says Patrick Allen, a wine importer based in Columbus, Ohio. “And it get built into the price everybody is paying for goods.” n nInflation is rising n nTariffs have already contributed to higher prices for apparel, furniture and other goods where the U.S. is heavily reliant on imports. Inflation has been inching up in recent months, although it ‘s still nowhere near the 9% level it reached three years ago, in the wake of the pandemic and Russia ‘s invasion of Ukraine. Annual inflation in September was 3%, compared to 2.3% in April when Trump first announced his worldwide tariffs. n nInflation watchdogs at the Federal Reserve are betting that Trump ‘s tariffs will raise prices once, as they work their way through the supply chain, but will not continue to cause upward price pressure month after month. n n ‘Havoc ‘ for importers n nWild swings in tariff rates — from 30% to over 100% — have also created challenges for importers who typically order products months ahead of time. n n”The unpredictability of the tariff situation continues to cause havoc and uncertainty,” said an anonymous computer manufacturer, quoted in a report this week from the Institute for Supply Management. n nBut even then, the manufacturer noted it wasn’t spurring more domestic production. n
“Even with the tariffs, the cost to import in many cases is still more attractive than sourcing within the U.S,” said the manufacturer. n nWhile the tariffs are designed to encourage domestic manufacturing by making imports more expensive, factory employment has dropped by more than 40,000 jobs since April, while the ISM index of manufacturing activity fell in October for the eighth month in a row. n n”The products we import are not readily manufactured in the U.S., so attempts to reshore have been unsuccessful,” said the manager of a machinery factory. “Overall, prices on all products have gone up, some significantly. We are trying to keep up with the wild fluctuations and pass along what costs we can to our customers.” n nSupreme Court challenge n nTrump ‘s emergency tariffs have been challenged by a number of businesses and states as exceeding the president ‘s authority. The White House has relied for many of the tariffs on a 1970s statute designed to address economic emergencies. That law never mentions the word “tariff,” and lower courts have found that using the law to impose taxes on virtually everything the U.S. imports goes too far. n nThe administration has warned of dire consequences if the tariffs are struck down by the high court. n n”With tariffs, we are a rich nation; without tariffs, we are a poor nation,” the administration said its Supreme Court brief. “America could go from strength to failure the moment such an incorrect decision took effect.” n nIn fact, tariffs accounted for just 6% of total government revenue in September — the most recent month for which figures are available. And the jump in tariff revenue that month was more than offset by a decline in corporate tax payments. n nThe president ‘s Plan B n nEven if the Supreme Court does find the president ‘s emergency tariffs are illegal, Trump has other options to impose import taxes, using powers that were explicitly granted by Congress. n n”I think in the end, he could piece together something very close to — if not identical to — what he ‘s done so far,” says law professor Kathleen Claussen, a tariff expert at Georgetown University. “That ‘s not to say we might not have legal challenges in the courts again. But certainly, on the surface, I think the president could move to replicate what he ‘s already done using these other statutes.”