• Tariffs collected $236 billion through November, highest since 1935
• US importers legally pay tariffs to customs, then typically pass costs to consumers
• Economists estimate average household cost of $2,400 in 2025 from tariff-driven price increases

WASHINGTON (TDR) — President Trump’s tariffs generated a record $236 billion in revenue through November 2025, according to data from the Yale Budget Lab, marking the highest tariff collection since 1935. However, economists emphasize that contrary to Trump’s claims, these taxes are paid by US importers and ultimately borne by American consumers through higher prices.

The tariffs contributed approximately 0.7 percentage points to consumer price inflation, with economists estimating an average household cost of $2,400 in 2025. The S&P 500 experienced its steepest drop since the COVID pandemic in April, falling nearly 20% over seven weeks before recovering strongly to near record highs by year-end.

Who Actually Pays Tariffs

Despite Trump’s repeated claims that foreign countries pay the tariffs, US Customs and Border Protection bills American importers directly when goods enter the country. Research from Harvard, the University of Chicago, the Federal Reserve Bank of Boston and the International Monetary Fund found that importers paid nearly 95% of tariff costs, with foreign exporters absorbing only 5%.

“It is importers — American companies — that pay tariffs, and the money goes to the U.S. Treasury,” the Peterson Institute for International Economics explains. “Those companies typically pass their higher costs on to their customers in the form of higher prices.”

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Council on Foreign Relations analysis shows the burden shifting over time. Initially in April and May, importers absorbed about 55% of tariff costs, hoping they were temporary negotiating tools. By October, importers bore only 27% of costs, with 55% passed to consumers and 18% to foreign exporters. Projections suggest that by mid-2026, consumers will shoulder 67% of the burden.

Highest Tariff Rates Since Great Depression

November’s effective tariff rate reached nearly 17% before accounting for consumption shifts—seven times greater than January’s average and the highest level since 1935, according to Yale Budget Lab data. The tariffs affect approximately $2.2 trillion of US goods imports, representing 67% of all imported goods.

The Tax Foundation estimates the tariffs increased federal tax revenues by $142.9 billion in 2025, or 0.47% of GDP, making them the largest tax hike since 1993. However, this still represents just a fraction of federal revenue compared to the $2.5 trillion from individual income taxes.

Impact on Household Budgets

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Research from the Tax Policy Center shows tariffs impose an average burden of about $2,100 per tax unit in 2026, with lower-income households paying a larger share of their earnings. Tariffs function as a regressive consumption tax, hitting lower-income Americans harder because consumption represents a larger share of their income.

“Tariffs are essentially a consumption tax, and consumption as a share of income tends to fall as incomes rise,” economists at the Economic Policy Institute explain.

Studies by Massachusetts Institute of Technology, University of Zurich, Harvard and the World Bank found Trump’s tariffs “neither raised nor lowered US employment” in sectors they were designed to protect. Washing machine prices increased by $86 per unit after tariffs, while dryer prices rose $92 despite not being tariffed.

Market Volatility and Trade Deficit

The erratic rollout of tariffs—announcing them, suspending or altering them, then introducing new ones—made 2025 one of the most turbulent economic years in recent memory. The trade deficit fell significantly from its March peak of $136.4 billion monthly to $52.8 billion in September, though the year-to-date deficit still ran 17% ahead of the same period in 2024.

Trump’s policies had the biggest impact on US-China trade. US tariffs on Chinese imports now reach 47.5%, according to Peterson Institute calculations, and the value of goods from China fell nearly 25% during the first three quarters. China dropped from the biggest source of American imports to number three behind Canada and Mexico.

Legal Challenges and Revenue Uncertainty

The US Trade Court ruled most new tariffs—those enacted under the International Emergency Economic Powers Act (IEEPA)—illegal, with the ruling upheld by federal appeals courts. The Supreme Court will hold oral arguments in November, with a decision expected by year-end.

If the Supreme Court upholds lower court decisions, roughly $90 billion of the $195 billion collected so far might need refunding, and projected revenue could fall by more than half. The Committee for a Responsible Federal Budget estimates net new revenue from tariffs would drop by $2.2 trillion to around $900 billion for fiscal years 2025-2035.

Should tariff policy acknowledge that American consumers and businesses ultimately bear the cost through higher prices?

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