President Donald Trump's tariff announcements no longer trigger the dramatic market swings seen in 2025. But the financial pain for American households is becoming unmistakable, just as economic confidence erodes ahead of the November 2026 midterm elections.
Many business groups had hoped the tariff wars would end in February, when the Supreme Court overturned Trump's emergency tariffs. That hope was dashed five months later, when Trump unveiled a new wave of import taxes to replace the struck-down levies.
These new tariffs cover nearly all US imports and, in the administration's view, rest on firmer legal ground—existing US trade law that lies beyond the Supreme Court's review. Trump has signaled he intends to impose many more of these so-called trade law tariffs.
As a trade economist who has tracked the tariff wars, I believe the longer these import taxes remain in place, the heavier the burden on consumers. The 2025 “Liberation Day” tariffs, which the Supreme Court invalidated, and other levies announced after the February ruling proved temporary. But the bulk of the new tariffs are designed to be permanent.
That permanence means the total cost to consumers is likely to rise even if rates stay flat—because the new tariffs will be stacked on top of older ones.
The cost squeeze
On one level, Trump's fixation on tariffs is puzzling. Tariffs remain unpopular, and it is unclear why he would double down before midterms when his approval ratings, including on the economy, are so low.
On another level, Trump's embrace of tariffs can be seen as an instrument of personal power. He has long viewed them as negotiating leverage, and he recently declared that US tariffs “aren't high enough.” He has also deflected criticism of their impact on prices by claiming, erroneously, that foreigners pay for them.
The simple fact is that US tariff invoices from the Treasury Department go to the American businesses that import foreign products. These companies may absorb some of the cost to protect market share and work through existing inventory. But eventually, the squeeze forces them to pass most of that extra tax onto US consumers—no matter which foreign countries are targeted.
Now that tariffs have had time to work through the economy, researchers are seeing the impact on prices. The Dallas Federal Reserve recently estimated that without tariffs, the Fed's preferred inflation measure would have risen at an annual rate of 2.3% in March, instead of the actual 3.2%. Meanwhile, an analysis by the Yale Budget Lab concluded that consumers are paying anywhere from half to the entire cost of the levies through higher prices, depending on the goods.
Tariffs upon tariffs
Trump based his July tariff announcements on three legal justifications: Section 301 (unfair trade practices such as forced labor), Section 232 (national security), and Section 338 (discrimination against US imports, a trade war tariff dating to the Smoot-Hawley Tariff Act of 1930).
The new Section 301 rates, which are global, currently range from 10% to 12.5%, but they could rise at the president's discretion. Section 301 has also opened the door to country-specific tariffs, such as 25% on Brazil, while Section 338 was used to impose an extra 50% on certain Canadian goods. Trump has also imposed levies ranging from 25% to 50% on steel, aluminum, automobiles, copper, timber, lumber, and pharmaceuticals.
More tariffs are planned for wind turbines, personal protective and medical equipment, robotics, machinery, and coal, as well as to counter foreign excess production capacity and support US production of generic prescription drugs.
With so many tariffs in the mix, consumers will be squeezed even harder because many of these taxes will be stacked. For example, Section 301 tariffs will be applied on top of older legacy tariffs based on World Trade Organization rules (the Most Favored Nation rate), and on top of each other.
So if a country faces tariffs for forced labor violations and excess capacity, each at 10%, on top of a uniform MFN rate of 3%, the total rate on all products from that supplier would be 23%. And this levy is paid by US consumers, not foreigners.
Pushback from the states
Trump is especially interested in Section 301, which is meant to remedy foreign trade practices that are discriminatory, unfair, or unreasonable and that burden US commerce. It sets no limit on tariff rates and lets the president discriminate among exporting countries. Federal courts have typically given the president broad discretion in implementing the statute.
Trump used this measure to punish virtually all US trading partners on grounds that they failed to prevent imports of goods made with forced labor. His administration based the decision on its own investigation that determined the US is the only country that prevents forced labor imports.
These tariffs were set at 12.5% for countries without any formal prohibition on forced labor imports, and 10% for all other countries with such a prohibition. They are similar in scope and impact to the earlier Liberation Day tariffs.
Twenty-five US states have challenged these levies at the US Court of International Trade, using reasoning similar to the Supreme Court's when it struck down the emergency tariffs as an unconstitutional tax on US consumers. The lawsuit claims the Section 301 tariffs do the same thing, citing the affordability burden.
The longer these permanent tariffs stay in place, the more they will reshape global supply chains and trade flows across the Indo-Pacific. For American consumers, the sticker shock is only beginning.
