The Trump administration’s tariff policies are poised to deliver the largest tax increase for US households in more than three decades, according to new estimates from the Tax Foundation.
With the full suite of tariffs now in effect or scheduled, the nonprofit estimates that the average American household faces an additional $1,300 in taxes this year and $2,000 in 2026 – costs that are already rippling through retail prices and consumer budgets.
The Tax Foundation’s analysis, published Monday, finds that the tariffs imposed under the International Emergency Economic Powers Act and Section 232 authorities have pushed the average effective tariff rate to 11.4%. That’s the highest level since 1943, and a sharp jump from the 1.5% average applied just three years ago.
While the Trump administration has repeatedly denied that tariffs are taxes, the Tax Foundation asserted its tariffs “are the largest US tax increase as a percent of GDP (0.55 percent for 2025) since 1993, surpassing the tax increases enacted under President Barack Obama and President George H.W. Bush.”
The numbers are more than just historical footnotes. The tariffs are expected to raise $168 billion in federal tax revenue in 2025 alone, and $2.9 trillion over the next decade on a conventional basis. Even after accounting for the drag on economic growth, the Tax Foundation projects $2.3 trillion in additional revenue over the next ten years.
“Altogether, we estimate the tariffs will raise $2.9 trillion on a conventional basis and $2.3 trillion on a dynamic basis from 2025 through 2034,” the report states.
But the impact extends beyond government coffers. The Tax Foundation estimates that tariffs will reduce after-tax incomes for the average household, with the top 1% seeing a smaller reduction. If the tariffs remain in place, after-tax incomes are projected to fall by 1.3% on average in 2026.
The reality is likely to be worse for Americans at large, according to the researchers behind the analysis, as the figures do not capture “additional costs to US households stemming from higher-priced alternative goods and loss of consumer choice.”
A separate Tax Foundation analysis offers another look at the retail consumer experience, estimating that retail prices have risen by 4.9% relative to the pre-tariff trend, with imported goods up 6% and domestic goods up 4.3%.
Certain categories have seen even sharper increases, including apparel, coffee and tea, cameras, household textiles, and furniture.
The research notes the tariffs' full effects are yet to be seen, as some businesses have chosen to absorb costs or continued production from pre-tariff inventory. That's not to mention the possibility of President Trump threatening even higher tariffs, as he did recently with China, as well as a pending Supreme Court decision on the legality of the tariffs declared under IEEPA.
"If the Supreme Court rules that the IEEPA tariffs may remain in place, we should expect even more price hikes heading into this holiday season and early next year," the Tax Foundation said.
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