WASHINGTON, D.C. — The Coalition for a Prosperous America (CPA) today strongly criticized a recent Tax Foundation analysis claiming President Trump’s tariffs cost the average American household $1,000 per year, calling the claim economically indefensible and misleading. The analysis—now being amplified by major media outlets—rests on a simplistic and fundamentally inaccurate assumption that all tariff revenue is directly paid by U.S. households.
The Tax Foundation’s calculation simply assumes the approximate $132 billion in new 2025 tariff revenue is paid directly by households, dividing that figure across 134.8 million households to produce an average estimate of a $1,000 annual burden per household. This approach assumes—contrary to actual business practices of the nation’s largest retailers—that tariffs function like a direct tax fully passed through to consumers. That assumption is contradicted by years of empirical data. If it were passed on to consumers directly, it would be immediately evident and plainly visible in official inflation data as higher costs paid by consumers. It is not and no such evidence exists.
“The Tax Foundation’s claim is not analysis—it’s pure fiction using arithmetic dressed up as economics,” said Jon Toomey, President of CPA. “Their analysis is simply a complicated way to divide total tariff revenue by the number of U.S. households and call it a ‘cost’ to families, ignoring real-world pricing data, who actually pays tariffs, and how markets function. It’s a textbook example of modeling to reach a predetermined political conclusion.”
Much like currency fluctuations or changes in shipping costs, tariffs are but one supply chain item cost. They are absorbed across global supply chains through a combination of reduced foreign export prices, lower margins, currency adjustments, and competitive pressures. Tariffs also represent only a fraction of final retail prices, which include labor, rent, utilities, logistics, and other non-tariff costs.
Numerous government and academic studies—including from the U.S. International Trade Commission and the Federal Reserve—have found limited and uneven tariff pass-through, concentrated in narrow product categories and far below a direct 1-1 transfer to consumers. A 2023 USITC study showed that the 25% steel tariffs implemented in 2018 increased the price of domestically produced steel by only 0.7%, while increasing the quantity of steel production by about 1.9%.
CPA has long criticized the Tax Foundation and others for repeating the false claim that “tariffs are legally paid by the US importer.” Under U.S. customs law, all manner of parties in a supply chain can act as a legal “importer-of-record”. This includes overseas vendors without any presence in the United States. These foreign vendors can and do remit tariffs directly to the U.S. Treasury. Alternatively, licensed customs brokers invoice foreign vendors daily to collect tariff revenue that will be remitted on the vendors’ behalf. Saying that “U.S. importers pay the tariff” in these situations is the same as saying “real estate attorneys pay the closing costs of a house” simply because the invoice was settled from the attorney’s escrow account.
What Inflation Data Actually Shows
Actual inflation data underlines the Tax Foundation’s false claim. Over the past year, prices for manufactured goods (commodities less food and energy commodities)—the category most plausibly affected by tariffs—rose just 1.4%, according to the Consumer Price Index. This is far below the total average inflation rate, despite being the closest linked to tariffs. To generate the Tax Foundation’s $1,000 annual increase in household costs at that inflation rate, the average household would need to spend over $70,000 per year on manufactured goods alone—a level of consumption that bears no resemblance to reality.
That hypothetical $70,000 would not even include non-tariffed essentials such as rent, electricity, healthcare, education, insurance, or most services, which make up the majority of household spending and are not impacted by trade or tariffs. These other categories (especially energy, rent, and medical care) are also the top contributors to inflation in 2025, not tariffed items. For the Tax Foundation’s analysis to be accurate, American families would need to spend nearly all of their income on tariff-affected imports—an assumption that is plainly false. The median household income was $83,730 in 2024.
The Tax Foundation also ignores Chinese export price data. A 2026 Oxford Economics report shows that from 2023 to 2025, China responded to tariffs by cutting export prices—absorbing tariff costs through margin cuts rather than passing them on to U.S. consumers. China has cut export prices by 10-30% in the past years for sectors such as vehicles, basic metals, plastics, and furniture. State subsidies and chronic overcapacity allow Chinese firms to cut prices aggressively while remaining profitable.
“This isn’t a disagreement over assumptions—it’s a misuse of basic economic reasoning,” Toomey added. “When the law, common business practices, and real price data contradict your model, you fix the model. You don’t ignore it all and publish the result anyway because it fits your pre-determined conclusion. Americans deserve honest analysis, not scare tactics driven by a political agenda funded by multinational corporations that are opposed to tariffs. The Tax Foundation’s $1,000 claim collapses under even minimal scrutiny. It’s not grounded in data, it’s not grounded in business reality or the law, and it should not be treated as a serious assessment of U.S. trade policy.”
CPA also noted that the Tax Foundation’s approach conveniently excludes the offsetting benefits of tariffs, including increased domestic investment, job creation, reduced reliance on foreign adversaries, higher wages, and tariff revenue that can be used to offset other taxes. Treating tariff revenue as a household ‘cost’ while ignoring where that revenue goes is analytically dishonest.
President Trump’s trade policies have driven massive new manufacturing investment, including major new facilities announced in autos, energy, pharmaceuticals, and advanced manufacturing. Tariffs are one tool—alongside federal procurement reform, tax policy, and industrial strategy—used to rebuild domestic capacity and strengthen economic resilience.
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