Tariffs: Who Really Pays, and How Much?
A deep dive into claims that tariffs are bringing "billions of dollars" into the U.S.
When President Trump (or anyone) says “we’re bringing in billions from China” through tariffs, it sounds like China is cutting a check to the U.S. Treasury. In reality, tariffs are a tax on imports, and the importer is almost always a U.S. company. They pay the tariff at the port, then pass most or all of that cost along to wholesalers, retailers, and finally U.S. consumers in the form of higher prices.
So the money the government collects from tariffs isn’t coming out of Beijing’s pocket — it’s coming out of yours. Economists across the spectrum (including many who like Trump’s trade stance) point this out repeatedly, and the data from the Congressional Budget Office and Federal Reserve backs it up: tariffs act as a hidden sales tax on Americans, not a bill to foreign governments.
The only way they “hurt” a foreign country directly is by making its goods less competitive in the U.S. market, but Americans almost entirely pay the revenue Trump brags about.
Example: A Chinese-made washing machine
Base price from the manufacturer
A Chinese factory sells a washing machine to a U.S. importer for $300.
Tariff applied at the U.S. port
Let’s say the tariff rate is 25%.
The U.S. importer has to pay $75 (25% of $300) to U.S. Customs before they can take the shipment.
That $75 goes to the U.S. Treasury — this is the “money from China” politicians brag about.
Who actually paid it?
Not the Chinese manufacturer — the U.S. importer paid it at the port.
Importer passes the cost on
The importer’s cost is now $375 ($300 + $75 tariff).
They still need their normal profit margin, so they sell it to a retailer for, say, $450 instead of the $375 they’d have charged without the tariff.
Retailer marks it up
The retailer applies their margin and overhead.
The washing machine now has a sticker price of $600 instead of $500.
The customer pays more
You, the American buyer, pay $100 extra — $75 of which went to the U.S. Treasury and $25 more because of the markup on the tariffed amount.
How “billions from tariffs” add up (and who pays)
Pick the pie:
Assume the U.S. imports $900B of goods that are subject to tariffs this year. (Ballpark: after Trump’s new rounds, lots more categories are covered; the average U.S. tariff rate is now reported around 18–19%, the highest since the 1930s. ) AP NewsApply an average rate:
If the weighted-average tariff across those goods is 18%, tariff revenue ≈ 0.18 × $900B = $162B. That’s the big number politicians cite: “we brought in $162 billion.”Who actually writes that check?
U.S. importers at the port. Then, per the evidence, they pass essentially all of it through to U.S. businesses and consumers via higher prices. Multiple top-tier studies on the 2018–2019 tariffs found near-100% pass-through to U.S. prices—i.e., Americans pay. American Economic AssociationHarvard Business SchoolJSTORWhy the bill to households is bigger than the Treasury’s haul:
You pay the embedded tariff plus normal markups along the chain (importer → wholesaler → retailer).
There’s also “deadweight loss” from distorted choices (people and firms buy costlier substitutes or delay purchases), which reduces real income beyond the revenue collected. That’s why nonpartisan scorekeepers project lower GDP and household purchasing power under higher tariffs. Congressional Budget Office
Reality check with recent history:
When the 2018–2020 tariffs hit, customs duties more than doubled, peaking at about $100B+ in FY 2022—proof the Treasury “brought in” more money. But the research consensus is that money overwhelmingly came out of Americans’ pockets through higher prices, not foreign governments. USAFacts
Quick takeaway
The revenue number (the “billions”) = tariff rate × tariffed import value.
The payer = Americans, via higher prices; foreign firms are hit mainly indirectly if U.S. demand shifts away from their goods. American Economic Association