Trump tariffs Effectively a Major Tax Increase,New Analysis Shows
WASHINGTON,D.C. – November 12,2025 – A new analysis reveals that former President Trump’s escalating tariffs are functioning as a important tax increase for American consumers,despite claims of a forthcoming “tariff dividend.” The study, conducted by UBS, underscores that while tariff revenue surged too $195 billion in fiscal 2025 – a 153% increase from $77 billion the previous year – the costs passed onto consumers through higher prices far outweigh any potential benefit.
The Committee for a Responsible Federal Budget projects Trump’s “reciprocal tariffs” could generate $1.3 trillion through 2029 and $2.8 trillion by 2034, potentially raising tariffs to nearly 5% of total federal revenue. this is comparable to implementing a new payroll tax or reducing the defense budget by one-fifth. However, the promise of a “tariff dividend”-a payout of “at least $2,000 a person (not including high-income people!)”-is mathematically unsound, according to analysts.
John Ricco of Yale’s Budget Lab estimates a $2,000 payment to every American would cost approximately $600 billion, exceeding the government’s tariff revenue. “The revenue coming in would not be adequate,” Ricco told the Associated Press. Even Treasury Secretary Scott Bessent expressed skepticism, stating he hadn’t discussed the idea with Trump and suggesting any “rebate” would likely take the form of a future tax cut.
Economists warn that tariffs drive up prices as importers pass costs onto consumers, effectively making the policy a regressive tax. This creates a feedback loop where tariffs intended to bolster industrial strength contribute to sustained inflation, hindering real income growth and limiting consumer spending. UBS describes this as a “narrow expansion,” potentially even narrower, with economic growth relying on circular investments in artificial intelligence and government revenue schemes rather than broad citizen purchasing power.
