Trade War 2.0 Tariff Claims: A Comprehensive Fact-Check

Claim #1: "Foreign Countries Pay These Tariffs"

The most persistent claim about the 2025 tariffs is that foreign countries and their exporters bear the financial burden. This claim has been repeated at rallies, press conferences, and on social media, framing tariffs as a tool to extract revenue from trading partners. [1]

The economic reality is unambiguous: tariffs are taxes paid by U.S. importers when goods enter the country. According to the Brookings Institution, the importer of record - typically an American company - writes the check to U.S. Customs and Border Protection. [11]

J.P. Morgan Research analyzed the pass-through dynamics through July 2025 and found that while "U.S. firms absorbed most of the burden via compressed margins" initially, this was unsustainable: "Many firms used pre-tariff inventory, delaying consumer impact." As those inventories depleted, price increases accelerated. [2]

Federal Reserve Chair Jerome Powell addressed this directly in April 2025: "Tariffs are taxes on imports. The economic evidence is clear that the cost is borne domestically, primarily by consumers and importing businesses." [14]

Studies of the 2018-2019 tariff rounds found that nearly 100% of tariff costs were passed through to U.S. consumers, with foreign exporters maintaining their pre-tariff prices. The Peterson Institute (PIIE) confirmed this pattern has continued in 2025. [5]

The Numbers: Highest Tariff Rates Since 1943

The scope of the 2025 tariff regime is historically unprecedented in the modern era. According to the Tax Foundation:

[1] [12]

U.S. Customs and Border Protection reported collecting $216.7 billion in tariff revenue for FY2025, a 146% increase from the previous fiscal year. October 2025 alone saw $34.3 billion in collections - more than many entire fiscal years in the pre-tariff era. [12]

Consumer Price Impacts: The Data

The Yale Budget Lab conducted comprehensive analysis of consumer price changes attributable to the 2025 tariffs, controlling for other inflationary factors. Their findings show significant price increases across major consumer categories: [4]

A critical finding is that domestic goods prices also increased by 4.3 percentage points above the pre-tariff trend. This occurs because when import competition is reduced by tariffs, domestic producers can raise prices without losing market share. [4]

NPR reported that these price increases have been "particularly acute for lower-income households, who spend a higher proportion of income on tariffed goods like clothing, furniture, and household items." [6]

Household Cost Burden: $1,100 to $3,800

Multiple economic research institutions have quantified the per-household impact of the 2025 tariffs, with estimates varying based on methodology:

• Tax Foundation: Average tax increase of $1,100 per household in 2025, rising to $1,400 in 2026 as full effects propagate [1]
• Yale Budget Lab: Price level rise of 2.3%, equivalent to $3,800 loss per household in purchasing power [4]
• Penn Wharton: $1,200 average with higher burdens on middle-income households [3]
• American Action Forum: Bottom income quintile faces $1,700 annual loss despite lower absolute spending [8]

[8]

Claim #2: "Tariffs Will Boost American Manufacturing"

A central justification for the tariff policy was that higher import costs would incentivize domestic manufacturing, creating American jobs. The data shows the opposite has occurred.

According to the Bureau of Labor Statistics, factory employment is DOWN more than 40,000 jobs since April 2025 - the month Liberation Day tariffs took effect. [9]

The Institute for Supply Management (ISM) reported that its Manufacturing Purchasing Managers Index (PMI) fell in October 2025 for the 8th consecutive month, remaining below the 50.0 threshold that indicates contraction. The report cited "tariff-related input cost increases" and "supply chain disruption from retaliatory measures" as primary factors. [10]

PBS NewsHour analyzed why tariffs failed to produce the promised manufacturing boom:

• Input cost increases: Many manufacturers rely on imported components; tariffs raised their production costs
• Retaliatory tariffs: Export markets contracted as trading partners responded in kind
• Investment uncertainty: Companies delayed capital expenditure pending legal challenges and policy stability
• Automation over hiring: Where reshoring occurred, companies invested in automation rather than workers

[7]

Legal Status: Half of Tariffs Under Supreme Court Review

The legal foundation for the 2025 tariffs - the International Emergency Economic Powers Act (IEEPA) - faces unprecedented challenge. According to Reuters, approximately half of all 2025 tariffs are currently being contested at the Supreme Court. [13]

The core legal question: Can the President invoke "economic emergency" powers to implement broad tariff policy that traditionally requires Congressional authorization under Article I, Section 8?

Plaintiffs argue:

• IEEPA was designed for targeted sanctions against specific threats, not comprehensive trade policy
• The "emergency" declaration is pretextual - trade deficits are not emergencies
• Congress's constitutional power over tariffs cannot be delegated so broadly
• The tariffs lack the procedural safeguards required under trade statutes

Oral arguments are scheduled for early 2026, with a decision expected by June. If the Court rules against the administration, tariff collections could be subject to refund - creating additional fiscal uncertainty. [13]

Verdict Summary: Claim-by-Claim Analysis

Conclusion

The 2025 tariff regime represents the largest tax increase on American consumers since 1993 and the highest effective tariff rate since 1943. The economic evidence is clear and consistent across independent analyses from institutions spanning the political spectrum:

• Who pays: American consumers and businesses bear 100% of tariff costs - not foreign countries
• Price impacts: Retail prices up 4.9 percentage points vs. pre-tariff trend; apparel up 8.99%
• Household costs: $1,100-$1,400 average annual burden; up to $3,800 in purchasing power loss
• Manufacturing: Jobs DOWN 40,000+; ISM index in 8-month contraction
• Regressive burden: Lower-income households hit hardest as percentage of income

The central claim that "foreign countries pay tariffs" is not merely misleading - it is factually false. Tariffs function as taxes on American imports, paid by American companies, and passed to American consumers. The promised manufacturing renaissance has not materialized; employment data shows the opposite trend.

While tariff revenue has indeed increased substantially ($216.7B in FY2025), this revenue comes directly from American households and businesses - it is not a transfer from foreign nations.