President Donald Trump announced a broad package of import duties on April 2, 2025, calling it “Liberation Day.” By May 15, Trump and/or his officials had announced new or revised tariff policies more than 50 times, according to The Washington Post. Trump’s on-again, off-again tariff policies led Financial Times columnist Robert Armstrong to coin the term “TACO trade“ to describe how many investors anticipated market retreats and rebounds. TACO, which stands for Trump Always Chickens Out, suggested that traders should essentially ignore Trump’s tariffs policies as nothing more than threats which would likely be reversed or rescinded.
After countless changes and reversals, tariffs between 10% and 41% were imposed on nearly 70 countries beginning August 7, affecting nearly all major U.S. trading partners. “IT’S MIDNIGHT!!! BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!” Trump posted shortly before midnight on his social media platform, Truth Social.
Just as he has consistently maintained that he won the 2020 election, Trump has repeatedly talked as if foreign countries pay the tariffs. According to CNN Fact Check by Daniel Dale, “Trump repeated his frequent false claim that, because of the tariffs he imposed on China during his first term, the US “took in hundreds of billions of dollars” that “they paid.” In fact, US importers, not foreign exporters like China, make the tariff payments, and study after study has found that Americans bore the overwhelming majority of the cost of Trump’s first-term tariffs on China.”
When presidential candidate Kamala Harris referred to Trump’s proposed tariffs as a “Trump tax,” Trump responded strongly – and wrongly. According to another CNN Fact Check by Katie Lobosco, Trump claimed Harris was lying when she referred to his tariff plan as a Trump tax.
“She is a liar. She makes up crap. ... I am going to put tariffs on other countries coming into our country, and that has nothing to do with taxes to us. That is a tax on another country,” Trump said.
“In September, he repeated the claim during an interview with Fox News: ‘It’s not a tax on the middle class. It’s a tax on another country.’”
Lobosco explains: “Here’s how tariffs work: When the US puts a tariff on an imported good, the cost of the tariff usually comes directly out of the bank account of an American buyer.”
“It’s fair to call a tariff a tax because that’s exactly what it is,” said Erica York, a senior economist at the right-leaning Tax Foundation.
There is a simple truth here that is often ignored: American businesses pay Trump’s tariffs, and sooner or later those businesses pass that cost along to consumers.
In short, Trump’s tariffs will force everyday Americans to pay more for all sorts of goods such as clothing, shoes, coffee, olive oil, beer, wine, spirits, cars, trucks, computers, and houses. And yes, it rightly can be called a “Trump tax.” Meanwhile, the wealthiest Americans and major corporations enjoy huge tax breaks thanks to Trump’s signature legislation, the One Big Beautiful Bill Act.
Trump supporters argue that even if the president is lying about who pays the tariffs, the tariffs are bringing in record amounts of new revenue. According to one conventional analysis, total tariff revenue for the current fiscal year reached $183.1 billion by late August. The monthly collection for July alone was $29.6 billion, a new record.
The government collected about $100 billion in tariff revenue during the four-month period from April to July this year – triple the amount from the same period last year.
However, those numbers only reflect direct revenue from tariffs. Dynamic analyses also consider the negative effects of Trump’s tariffs ,such as a decrease in imports due to higher costs and other factors which shrink the overall tax base, resulting in smaller revenue gains.
It’s estimated that, as of July of this year, tariffs have produced less than 3% of total federal revenue. Most government income continues to come from individual and payroll taxes. If taxes were raised on the wealthiest Americans and large corporations — Big Oil, for example, often pays little or nothing in taxes — we could shrink the national deficit without tariffs, and without cutting vital social programs like Medicaid and Supplemental Nutrition Aid Program (SNAP).
Trump supporters like to point out that our economy hasn’t collapsed altogether as some doomsayers had predicted. Bear in mind that most trading systems act on real-time data – not on speculation about potential negative effects Trump’s tariffs might create in the future. And, remember TACO? Many investors have largely ignored the tariffs, as if someday they might just vanish into thin air.
Apparently that “someday” might come sooner than expected. According to the BBC, “A US appeals court has ruled that most tariffs issued by US President Donald Trump are illegal, setting up a potential legal showdown that could upend his foreign policy agenda.
“In a 7-4 decision, the US Court of Appeals for the Federal Circuit rejected Trump’s argument that the tariffs were permitted under an emergency economic powers act, calling them ‘invalid as contrary to law.’
“The ruling will not take effect until 14 October, to give the administration time to ask the US Supreme Court to take up the case.”
Why are the tariffs contrary to law? According to CBS News MoneyWatch (9/1/2025), “Mr. Trump justified the taxes under the 1977 International Emergency Economic Powers Act, or IEEPA, by declaring longstanding U.S. trade deficits ‘a national emergency.’
“In February, he’d invoked the law to impose tariffs on Canada, Mexico and China, saying that illegal immigration and drug trafficking amounted to a national emergency and that the three countries needed to do more to stop it.”
Is Trump’s so-called emergency real, or is he creating a fake emergency to bolster his power? In The Atlantic, in a story entitled “State of Permanent Fake Emergency”, Paul Rosenzweig writes, “Donald Trump has figured out the cheat code for authoritarianism: Fake emergencies bring real power. The president has invoked emergency authority in three distinct contexts: declaring a public-safety emergency to defend his takeover of the District of Columbia; claiming an ‘invasion’ to justify an immigration crackdown, including sending the National Guard to Los Angeles; and invoking ‘extraordinary’ factors to support his tariff war. Although Trump is not the first president to grab greater powers behind the cloak of emergency authority, he is the first to have done so in such an extreme way. Worse yet, the lack of resistance from Congress or the courts suggests that there is little, if anything, to prevent Trump from expanding his use of ‘emergency’ authority even further as he accumulates power.”
Conservatives hold a 6 – 3 majority on the US Supreme Court. Trump appointed three of the six conservative justices. It’s not for certain, but experts agree that they’ll probably rule in Trump’s favor.
If SCOTUS upholds the decision that the tariffs are illegal, the government will have to refund all the tariffs that were illegally collected. If the Court instead overrules the decision, it’s only a matter of time before consumers are hit hard by the Trump tariffs – aka the “Trump tax.”
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