The midterms are behind us. Everyone is reading the exit polls and looking for where to place blame. Anti-tariff Republicans and free trade promoters have spent the last few days purposefully conflating the cost of living crisis, which is real, with tariffs, which is a false narrative. In fact, since President Trump announced his global tariff policy in April 2025, tariffs have come down, including tariffs on China. The only meaningful increase has been on Canada — a policy most Americans understand as erratic and are against — despite never being asked which tariffs have led to pressures on their ability to pay their bills.
The emerging argument is straightforward: Eliminate all tariffs and that will magically lower prices and put more money back into consumers’ pockets. Not so fast, folks.
Heath Mayo, a conservative attorney and the founder of Principles First, a donor-led organization created in 2019 as an anti-Trump alternative for Republican voters, recently wrote on X that multiple studies estimate repealing all tariffs would save every American approximately $100 a month. That is barely enough for a family of three to go out to eat once a month at The Olive Garden, with tip. Mayo suggested that blanket repeal should be among the first actions of the next Congress.
Other estimates of the tariff impact on consumers vary and have been with us since 2025’s “Liberation Day.” The Tax Foundation, for example, currently estimates that tariffs will impose an average additional tax burden of $820 per household in 2026. Importantly, that is a household estimate, not a per-person savings guarantee.
Nevertheless, the political message is unmistakable. Tariffs are being presented as a significant contributor to the affordability crisis, with outright repeal offered as the solution.
No one ever asks where Americans are feeling the financial pressure most. It is unlikely from imported Longines watches, or European-made espresso machines. The heat map for high costs is of course on all services. It is mostly in mandatory purchases like rent, health and car insurance, electricity, and rising services fees like internet and streaming entertainment services that are the sources of financial pressure. As we have noted recently here at CPA, GEICO and Aetna insurance premiums (up at least 28% nationwide since 2022) are not imported, and not subject to tariffs.
For sure, tariffs can increase prices on imported goods and domestically produced substitutes. To say otherwise would be factually incorrect and misleading. However, eliminating tariffs would not address any of those other expenses mentioned above. Nor would eliminating tariffs guarantee that every dollar of reduced import costs would reach consumers.
The price impact of the 2025 tariffs has already run its course, and it came from the emergency tariffs, not the sectoral ones. The IEEPA tariffs took the average U.S. tariff rate from about 3% to a peak near 16% before the Supreme Court struck them down in February. New York Fed economists estimate that only about 25% of a tariff reaches consumer prices, and that the 2025 tariffs added 2.9 percentage points to inflation in tariff-exposed goods at the February peak. Those goods are only about 20% of the household basket, so the entire tariff effect on overall inflation was roughly 0.6 percentage points in its worst month, and it was a one-time step in the price level rather than an ongoing driver. The Fed economists attribute the easing since February to the Court’s removal of the IEEPA tariffs, and by their forecast the tariff contribution to goods inflation fell to zero by August. The Section 232 tariffs on steel, aluminum, copper, autos, lumber and heavy trucks were in place the entire time. They are in place now, with coverage still expanding, and yet still the Fed puts the tariff contribution to inflation at zero.
The September CPI shows what is actually driving inflation now: energy is up 20.4% on the year, shelter up 3.2%, core services up 3.2%, and all goods outside of food and energy, the category most exposed to tariffs, up only 0.7%. The tariffs that remain are the sectoral ones, which were never struck down and sit behind the factory announcements of the last two years. Repealing them would do nothing about a price shock that has already passed.
Then there is another aspect of the tariff argument. It is too broad. It lumps all tariffs into one. The blanket-repeal argument ignores the national security tariffs — the Section 232 tariffs placed on things like steel, aluminum and automotive — that are labor intensive, employ millions, and rely on major investments for future growth. They also require rigorous review by the Commerce Department’s non-partisan Bureau of Industry and Security (BIS) to study the import effects on certain industries deemed a national security imperative, as opposed to the whims of the White House. Those are the gold standard tariffs. And they have delivered domestic investment in protected areas that have led to manufacturing production, employment, and higher wages, even as those wages are being eroded by inflation caused by commodity and services inflation, again that have almost nothing to do with trade policy.
The debate on tariffs going forward, therefore, should not be about whether all tariffs are bad and a cost overhang for consumers looking for a breather. It should instead be about which tariffs strengthen the American economy and — taken further — how tariff revenue can improve household finances.
In other words, the framing for tariffs is fairly straight-forward: tariffs for industrial protection under a national and economic security imperative, and tariffs for revenue.
Congress Should Fix Tariff Policy, Not Abolish It
BY KENNETH RAPOZA & ANDREW RECHENBERG
Kenneth Rapoza is a Senior Analyst and Andrew Rechenberg is a Senior Economist for the Coalition for a Prosperous America.
The midterms are behind us. Everyone is reading the exit polls and looking for where to place blame. Anti-tariff Republicans and free trade promoters have spent the last few days purposefully conflating the cost of living crisis, which is real, with tariffs, which is a false narrative. In fact, since President Trump announced his global tariff policy in April 2025, tariffs have come down, including tariffs on China. The only meaningful increase has been on Canada — a policy most Americans understand as erratic and are against — despite never being asked which tariffs have led to pressures on their ability to pay their bills.
The emerging argument is straightforward: Eliminate all tariffs and that will magically lower prices and put more money back into consumers’ pockets. Not so fast, folks.
Heath Mayo, a conservative attorney and the founder of Principles First, a donor-led organization created in 2019 as an anti-Trump alternative for Republican voters, recently wrote on X that multiple studies estimate repealing all tariffs would save every American approximately $100 a month. That is barely enough for a family of three to go out to eat once a month at The Olive Garden, with tip. Mayo suggested that blanket repeal should be among the first actions of the next Congress.
Other estimates of the tariff impact on consumers vary and have been with us since 2025’s “Liberation Day.” The Tax Foundation, for example, currently estimates that tariffs will impose an average additional tax burden of $820 per household in 2026. Importantly, that is a household estimate, not a per-person savings guarantee.
Nevertheless, the political message is unmistakable. Tariffs are being presented as a significant contributor to the affordability crisis, with outright repeal offered as the solution.
No one ever asks where Americans are feeling the financial pressure most. It is unlikely from imported Longines watches, or European-made espresso machines. The heat map for high costs is of course on all services. It is mostly in mandatory purchases like rent, health and car insurance, electricity, and rising services fees like internet and streaming entertainment services that are the sources of financial pressure. As we have noted recently here at CPA, GEICO and Aetna insurance premiums (up at least 28% nationwide since 2022) are not imported, and not subject to tariffs.
For sure, tariffs can increase prices on imported goods and domestically produced substitutes. To say otherwise would be factually incorrect and misleading. However, eliminating tariffs would not address any of those other expenses mentioned above. Nor would eliminating tariffs guarantee that every dollar of reduced import costs would reach consumers.
The price impact of the 2025 tariffs has already run its course, and it came from the emergency tariffs, not the sectoral ones. The IEEPA tariffs took the average U.S. tariff rate from about 3% to a peak near 16% before the Supreme Court struck them down in February. New York Fed economists estimate that only about 25% of a tariff reaches consumer prices, and that the 2025 tariffs added 2.9 percentage points to inflation in tariff-exposed goods at the February peak. Those goods are only about 20% of the household basket, so the entire tariff effect on overall inflation was roughly 0.6 percentage points in its worst month, and it was a one-time step in the price level rather than an ongoing driver. The Fed economists attribute the easing since February to the Court’s removal of the IEEPA tariffs, and by their forecast the tariff contribution to goods inflation fell to zero by August. The Section 232 tariffs on steel, aluminum, copper, autos, lumber and heavy trucks were in place the entire time. They are in place now, with coverage still expanding, and yet still the Fed puts the tariff contribution to inflation at zero.
The September CPI shows what is actually driving inflation now: energy is up 20.4% on the year, shelter up 3.2%, core services up 3.2%, and all goods outside of food and energy, the category most exposed to tariffs, up only 0.7%. The tariffs that remain are the sectoral ones, which were never struck down and sit behind the factory announcements of the last two years. Repealing them would do nothing about a price shock that has already passed.
Then there is another aspect of the tariff argument. It is too broad. It lumps all tariffs into one. The blanket-repeal argument ignores the national security tariffs — the Section 232 tariffs placed on things like steel, aluminum and automotive — that are labor intensive, employ millions, and rely on major investments for future growth. They also require rigorous review by the Commerce Department’s non-partisan Bureau of Industry and Security (BIS) to study the import effects on certain industries deemed a national security imperative, as opposed to the whims of the White House. Those are the gold standard tariffs. And they have delivered domestic investment in protected areas that have led to manufacturing production, employment, and higher wages, even as those wages are being eroded by inflation caused by commodity and services inflation, again that have almost nothing to do with trade policy.
The debate on tariffs going forward, therefore, should not be about whether all tariffs are bad and a cost overhang for consumers looking for a breather. It should instead be about which tariffs strengthen the American economy and — taken further — how tariff revenue can improve household finances.
In other words, the framing for tariffs is fairly straight-forward: tariffs for industrial protection under a national and economic security imperative, and tariffs for revenue.
Smarter Tariffs: Protect Industries That Can Ramp Up Domestic Production
We can make the case for a more strategic approach to tariffs. The angst over tariffs among businesses is that they are often short-lived and can be too easily negotiated away; they are used as trade leverage, which adds a new layer of unpredictability for businesses. If these are businesses Washington would like to see investing more in the U.S., and hiring more, they are going to be slower to do it if the policy is too easily given up in trade talks.
Political leaders on both sides often complain that the tariff policy lacks a vision, or a message. They are quite specific in their complaints. The Canada non-Section 232 tariffs, imposed by the White House after failed trade talks, often get cited in polls showing people are against them. On Capitol Hill, the new “forced labor” Section 301 tariffs are being pegged as an unjustifiable replacement for the expired 10% Section 122 tariffs, which replaced the April 2025 International Economic Emergency Powers Act tariffs, ruled illegal by the Supreme Court this year. But what they do not complain about, or ever mention in a bad light, are the sectoral tariffs for automotive, steel and other labor intensive industries.
The End Trump’s Tariff Tax Act (S. 5390), introduced by Sen. Chuck Schumer (D-NY) and numerous Democratic colleagues, would terminate the forced-labor tariffs and repeal tariff authorities under Sections 122 and 338. It does not touch Section 232.
That absence of the Section 232 critique reveals the fault line. Sectoral tariffs are what CPA chief economist emeritus Jeff Ferry refers to as “Smarter Tariffs” in his new Substack “The Growth Imperative.” Smart tariffs are about protecting industries capable of expanding domestic production with those where import restrictions would simply raise prices or shift sourcing from one low-cost country to another without increasing investment or production at home.
The latest CPI backs this up. Nineteen months into a 25% tariff on imported automobiles, the September CPI for new vehicles was up 0.6% on the year, below the 0.7% for all core goods and a fraction of the 3.7% headline rate, while used vehicles were down 1.5%.
Tariffs should generally target industries rather than countries, other than China, which is an easy bipartisan target for tariffs. Even former World Trade Organization chief, Pascal Lamy, has given up on free trade globalism. He blames China. He is now calling for a managed trade relationship with them, which of course includes a basket of policies, not the least being import quotas and tariffs.
The purpose of sector specific tariffs should be measurable gains in industrial capacity, investment, employment, and national security. That is opposed to using tariffs as a punishment, or as negotiable trade leverage. Tariffs that do not meet this requirement can perhaps be low enough — like around 10% — to serve as a revenue generator that could eventually allow for no Federal income taxes for lower middle class wage earners. That’s much better than one free dinner a month at the Olive Garden. The 10% global tariff could be a permanent tariff structure and, if done right, it lowers taxes, which is a cost burden.
Congress Can Preserve Strategic Tariffs, Cut Taxes For Lower Middle
Last year we saw a Republican and a Democrat join forces to write legislation that would codify a 10% universal tariff. Rep Jared Golden (D-ME) and Rep Greg Steube (R-FL), introduced the ‘Secure Trade Act’ (H.R. 4978). The legislation did not say the 10% could be used to raise revenue for tax cuts for certain income levels, but it is a step in the right direction and was bipartisan. (Golden did not run for re-election and will not be back in 2027, however.)
That bill is especially relevant because the U.S. baseline tariff today under the forced labor 301s is already 10% to 12.5%, depending on whether a country has committed to its own forced-labor import ban, and it covers 60 economies accounting for more than 99% of U.S. imports. A 10% tariff is not protective, and a lot of the one-time price increase would be eaten away by the foreign exchange rates that favor the dollar. It’s not a cost increase, in other words. And it has potential to be a cost of living deflator.
In 2024, CPA published an economic model examining a 10% universal tariff combined with tax relief for lower- and middle-income households. The analysis estimated that such a tariff would generate approximately $263 billion in annual revenue. Consider a single worker earning $60,000 annually. Under the 2026 federal income-tax schedule, assuming the standard deduction and no other adjustments or credits, that worker would owe approximately $5,020 in federal income tax. Eliminating that liability would provide roughly $418 a month in tax relief. Congress could work on a revenue tariff and use it to benefit constituents in red AND blue states that have qualifying income.
In other words, not all tariffs are bad. Erratic, unpredictable tariffs, along with tariffs on goods that cannot ramp up U.S. production in any meaningful way, should be secondary to the sectoral, national security tariffs. The Section 232s are the gold standard. It seems like both parties know this, judging by presumptive Senate Majority Leader Schumer’s (D-NY) tariff bill which does not mention them.
Lastly, for truly long term thinking — something our main rival, China, is often praised for doing — tariffs should be paired with industrial investment policies. Think of the ‘CHIPS Act’ for semiconductors and what the ‘Inflation Reduction Act’ did for solar manufacturing and labor in that space. Import protection does not guarantee that manufacturers will build new factories, particularly in industries where supply chains and production capabilities have largely moved overseas.
The choice before Congress should not be between ending tariffs and returning to pre-2016 free trade with the world. The choice, and the actions, should be how to design tariff policies that strengthen American production, and add to the middle class labor force. This creates the opportunity for Washington to increase workers’ disposable income by reducing Federal income taxes. The story that consumers are complaining about is that tariffs as a financial pressure point never comes with the question of where their biggest financial pressure lies. For sure, those monthly bill increases are not due to imported Hyundai engines, or Canadian lumber.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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