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I will never understand why President Trump, brought back to office partly in response to a sharp rise in prices during the Joe Biden interlude, would pursue the expensive tariff policy we’ve been subjected to since the beginning of 2025. And yet here we are, with another reason to be unhappy about inflation and the cost of living.
Sadly, the administration’s response to the pressure is as erratic as its tariff policy.
On one hand, Trump lowered tariffs to bring down the price of beef, effective this week. The White House acknowledged the link between tariffs and higher prices by explaining that the cost of beef has risen “unreasonably” and that the remedy is to temporarily import more of it at a lower tariff rate. Experts expect the 300,000 metric tons of relief to come largely from South America.
Apparently, though, this economic lesson has not traveled very far. As Trump liberalized the market for beef, he also imposed new 50% tariffs on some $20 billion worth of Canadian goods, once again behaving as though buying from our closest neighbor is a detriment to U.S. consumers. Canada is retaliating in kind against American exports beginning Sept. 8. Products caught in the escalating trade war include steel, aluminum, dairy, appliances, agricultural equipment, pulp and paper, plastics and electronics.
Economic war with Canada not only reminds the American people of a policy they hate, but runs counter to an affordability agenda. Research on the effects of Trump’s tariffs continues to surface and offer clarity.
Take the most recent paper by economists at the Federal Reserve Bank of New York and Columbia University. Mary Amiti, Sebastian Heise and David Weinstein looked at who shoulders the cost of the tariffs, examining which part of the tariff reaches consumers through higher prices versus which share of the price hike is due to other factors. The group estimates that a 10% tariff on all imports will raise U.S. consumer prices by about 2.6%. Roughly two-thirds of the increase comes quickly and directly from the tariff being passed on to customers at the border. The remaining third of the price hike shows up more slowly in American-made goods.
Let me repeat that: Raising tariffs on foreign goods also raises the prices of American-made goods. This happens partly because domestic producers pay more for imported parts and materials. But it also occurs because domestic producers, facing less competition, often raise their prices simply because they can.
This is only the latest study to knock out protectionists’ three main claims at once.
The first claim is that “foreigners pay the tariff.” It’s hard to deny that the pass-through of costs collected at the border to U.S. consumers amounts to anything less than a tax.
Some intellectually honest protectionists concede as much. In fact, it’s what they want. They prefer a second claim: that higher import prices will push American consumers to switch from foreign goods to American goods. That may be. However, we can’t actually avoid an import tax that shows up in domestic prices and fatter markups. Buying American doesn’t actually shelter us from higher prices.
The third claim is that tariffs help American manufacturing as a whole. But for the average firm facing higher costs for both foreign and domestic inputs, tariffs do little.
What’s left is a tariff working exactly as designed: a hidden, unavoidable import tax that makes everything imported more expensive, hands government-favored firms pricing power at the expense of consumers and taxes the domestic production it claims to defend. Citing Yale University’s Budget Lab, the Washington Post’s Ramesh Ponnuru points out that “Trump’s tariffs are costing American households an average of $1,100 a year.”
Unfortunately, because the prices of domestic goods take months to rise, the affordability crisis is still developing.
It’s not as if we don’t know what would help. The administration’s beef policy inadvertently acknowledges the argument for free trade. Now, apply that insight consistently.
If you want cheaper houses, do not make Canadian lumber more expensive. If you want more affordable cars and appliances, do not tax steel and aluminum inputs. If you want American manufacturers to compete, do not make them pay more for intermediate goods. And if you want American exporters to prosper, do not repeatedly provoke America’s trading partners into retaliating against them. In short, remove the tariffs.
Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate.
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Ideas expressed in the piece
The article argues that the Trump administration’s broad tariff strategy since early 2025 undercuts its stated goal of improving affordability, because tariffs function as an extra tax on consumers and raise the overall cost of living rather than relieving it.
The piece contends that the temporary decision to lower beef tariffs, allowing an additional 300,000 metric tons of imports at reduced rates, implicitly acknowledges that tariffs have driven beef prices “unreasonably” high and that liberalizing trade is an effective tool for price relief.
The article highlights recent economic research, including work by Federal Reserve and Columbia University economists, to argue that tariffs are largely passed through to consumers: it cites estimates that a 10% tariff on all imports raises U.S. consumer prices by about 2.6%, with roughly two-thirds of the increase coming quickly via higher import prices and the remaining third appearing more slowly in U.S.-made goods through higher input costs and markups[3][7][8].
Building on that evidence, the column contends that tariffs not only make foreign goods more expensive but also raise prices of domestically produced goods, because U.S. manufacturers pay more for imported parts and materials and often use reduced foreign competition to increase markups. Research tracking prices in real time similarly finds measurable increases in both imported and domestic goods prices following recent tariff rounds[1][2][5].
The article argues that protectionists’ three core claims are undermined by this evidence: first, the idea that “foreigners pay the tariff” is disputed by studies showing U.S. consumers and businesses shoulder most of the burden; second, the notion that buying American avoids the tax is challenged by findings that domestic prices also climb; and third, the belief that tariffs broadly help manufacturing is questioned because many firms face higher costs on both imported and domestic inputs and see little net benefit[1][3][5][7].
Drawing on research cited in national analyses, the piece suggests that the cumulative impact of Trump-era tariffs is substantial at the household level, noting estimates that tariff policy now costs the average American household roughly four figures annually, with the affordability squeeze intensifying as domestic prices continue to adjust over many months[1][2][5][8].
The article stresses that escalation with Canada—50% U.S. tariffs on around $20 billion in Canadian goods and dollar-for-dollar Canadian counter-tariffs on a comparable volume of U.S. exports—amounts to an “economic war” that further raises costs for consumers and producers on both sides of the border, targeting sectors such as steel, aluminum, dairy, appliances, agricultural equipment, pulp and paper, plastics and electronics[4][6][9].
The column argues that these policies contradict an affordability agenda: if the administration wants cheaper houses, cars, and appliances, it should not raise the cost of Canadian lumber or tax steel and aluminum inputs; if it wants U.S. manufacturers and exporters to thrive, it should avoid making intermediate goods more expensive and provoking retaliation that hits American firms.
In conclusion, the article suggests that consistent application of the logic used to cut beef tariffs would mean rolling back the broader tariff program altogether, framing tariff removal and wider free trade as key steps toward easing inflation and restoring consumer purchasing power[1][2][7].
Different views on the topic
Supporters of Trump’s tariff approach argue that higher import taxes are needed to counter what they describe as longstanding Canadian “discrimination” against U.S. commerce, including in alcoholic beverages, dairy and motor vehicles; recent official explanations for the new 50% tariffs say they are designed to offset these barriers and pressure Canada into fairer treatment of U.S. firms[4].
Protectionist advocates contend that tariffs can boost domestic manufacturing and protect jobs by making foreign goods more expensive, thereby encouraging consumers and businesses to “buy American” and giving U.S. producers a larger share of the home market; these arguments emphasize strategic industrial policy and national economic resilience over short-term price increases[1][3][7].
Some officials and commentators who favor the tougher stance maintain that tariffs are a legitimate tool to enforce trade agreements such as USMCA, correct perceived imbalances and respond to provincial procurement rules and alcohol sales restrictions that they view as unfair to U.S. producers[4].
Industry voices in certain sectors signal support for, or acceptance of, tariffs when those measures enhance their competitive position relative to rivals. For example, a major appliance manufacturer has told investors that tariff costs are being passed on to customers and that the company’s competitors may be hurt even more, suggesting that protection can strengthen the firm’s market standing despite higher prices for consumers[9].
Some economic analyses note that while U.S. consumers absorb a large share of tariff costs, foreign exporters and overseas producers also bear part of the burden through lower margins or lost sales, a point that tariff proponents cite to argue that trade partners are not escaping the consequences of restrictive practices and that tariffs can exert pressure abroad as well as at home[1].
Advocates of a hard-line approach toward Canada argue that retaliatory dynamics are an expected phase of leverage-based bargaining: by imposing steep tariffs and accepting short-term pain, the United States, in this view, can push Canada to roll back its own restrictions and ultimately secure better long-term access for U.S. goods and services[4].
Some policymakers and union leaders who back tariffs emphasize national security and supply-chain resilience, arguing that dependence on imported steel, aluminum, and critical manufacturing inputs leaves the United States vulnerable; they see protective measures as necessary to maintain domestic capacity even if that entails higher prices and trade frictions[1][7].
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