For many American families, grocery bills, household goods, and everyday expenses are becoming harder to manage. Behind this squeeze on wallets there could be a less visible factor, that is President Donald Trump’s tariff policy. New research shows these trade measures are acting like a hidden tax, costing households hundreds and thousands of dollars each year.
According to a new report by the non-profit think tank Tax Foundation, tariffs have already resulted in an average tax increase of about $1,000 per US household in 2025. If the current duties remain in place, that figure is projected to rise to $1,300 per household in 2026. For families already stretched by housing, healthcare, and education costs, this added burden is significant.
The Tax Foundation notes that Trump “imposed and threatened a variety of tariffs” during his first year back in office. The scope of these tariffs has shifted, with different products and countries targeted as trade deals were negotiated or proposals were later withdrawn. But regardless of these changes, the overall impact on households has remained heavy.
The biggest tax increase in decades
The report says Trump’s second-term tariffs as the “largest US tax increase as a percent of GDP” since 1993. That year, President Bill Clinton signed the Omnibus Budget Reconciliation Act, also known as the Revenue Reconciliation Act of 1993. That law focused to reduce the federal budget deficit through a mix of tax increases and spending cuts, without harming long-term economic growth.
By comparison, the current tariffs are not framed as taxes, but their effect on consumers is similar, higher prices across a range of imported goods that families rely on every day.
Tariffs surge as trade barriers rise
According to the World Bank, the weighted-average applied tariff rate on US imports was just 1.5 percent in 2022. The Tax Foundation found that, with the tariffs now in place and scheduled, this rate jumps to 13.5 percent. If tariffs imposed under emergency powers are excluded, those currently under legal review, this rate would still stand at 6.4 percent in 2026. Either way, Americans are facing trade barriers not seen in decades.
Trump’s imposed tariffs are projected to raise more than $2 trillion in revenue over the next ten years. However, the Tax Foundation estimates that these tariffs will also reduce America’s GDP by 0.5 percent. When the broader “negative economic effects” are taken into account, the expected revenue falls to $1.6 trillion.
In its analysis, the Tax Foundation wrote, “Economists generally agree free trade increases the level of economic output and income, while conversely, trade barriers reduce economic output and income. Historical evidence shows tariffs raise prices and reduce available quantities of goods and services for US businesses and consumers, resulting in lower income, reduced employment, and lower economic output.”
The White House disputes the idea that tariffs are harming the economy. Responding to the report, spokesman Kush Desai told ABC News, “America’s average tariff rate has increased by nearly tenfold in the past year—while inflation has actually cooled, real wages have risen, GDP growth has accelerated, and trillions in investments continue pouring in to make and hire in America.”
US Supreme Court yet to take a call
Adding uncertainty to the situation, the Supreme Court is currently reviewing whether the president’s emergency powers under the International Emergency Economic Powers Act allow him to impose tariffs in the way he has over the past year. According to the Tax Foundation, a decision is expected “soon.”