As Americans prepare to file their taxes, they should know they’ve already been paying a new one all year — import taxes, better known as tariffs. Despite political rhetoric to the contrary, that’s exactly what tariffs are: a tax on consumption, and a regressive one at that.
The Tax Foundation estimates that tariffs amount to an average tax increase of $1,000 per U.S. household in 2025, hitting lower-income families hardest, since they spend a larger share of their earnings on imported goods such as food, clothing, and gasoline.
Tariffs don’t reduce the trade deficit, help pay down the national debt, or create domestic manufacturing jobs. They raise the cost of imported goods, passing those costs directly to consumers, while also making American products less competitive abroad. Since over half of all imports are intermediate goods, used as inputs by American firms, tariffs also raise the cost of domestic production. This helps explain why we lost 70,000 manufacturing jobs last year, according to the Federal Reserve. The result is a double whammy: the things we want to import become more expensive, and the goods we produce are harder to sell.
VANCE AND REPUBLICANS EYEING 2028 RUN IN A TOUGH SPOT ON TARIFFS
The United States actually has a long history with tariffs, well before President Donald Trump’s “Liberation Day” executive order in early April 2025 that imposed a baseline 10% “reciprocal” tariff on other countries, plus higher tariffs on certain U.S. trading partners: 34% on China, 20% on the European Union, and 24% on Japan.
American history is littered with tariff episodes that ended badly — from colonial-era trade restrictions that helped spark the revolution to the Tariff of 1816, which contributed to the nation’s first major depression, the Panic of 1819. Then, in 1930, Congress passed the Smoot-Hawley Tariff Act, seeking to protect American industries from foreign competition at the onset of the Great Depression. While this increased the effective tariff rate on imports to nearly 20%, it failed to protect American producers and worsened the economic crisis.
Yet, as economist Adam Smith demonstrated 250 years ago with the publication of An Inquiry into the Nature and Causes of the Wealth of Nations, voluntary trade makes us richer. This is true both personally and societally; it’s the path to economic development and dynamism. The world got on board with this idea, and tariffs have generally been declining since World War II. The effective tariff on imports dropped to 10% in 1970 and has hovered around 5% since then — coinciding with unprecedented economic growth and prosperity in the U.S. and abroad.
That is, until the Trump administration began a yearlong on-again, off-again, Ross-and-Rachel-from-Friends dalliance with tariffs. The U.S. effective tariff rate now sits at nearly 14%, its highest level since 1938, up from just 2.5% in 2024. But that number is almost certainly wrong. No one, not importers, not chief financial officers, not the administration itself, knows what the true tariff rate actually is, was, or will be next Tuesday.
In less than a year, the administration has implemented dozens of executive orders on tariffs. It has made more than 75 announcements that have threatened, imposed, delayed, modified, or canceled tariffs over that time. Tariffs on certain countries have gone up, gone down, or disappeared altogether — including tariffs on the Heard Island and McDonald Islands, inhabited only by penguins. Nobody, it seems, can escape tariffs.
In the wake of the Supreme Court’s recent decision invalidating Trump’s International Emergency Economic Powers Act tariffs last month, the administration implemented new Section 122 tariffs, which are already facing litigation over their constitutionality. All of this back-and-forth creates regime uncertainty, giving other countries even more reason to distance themselves from the see-saw of American tariff policy.
There is a deeper problem with tariffs. They harm the majority of people while a select few benefit, undermining the core economic framework that’s made the U.S. the most vibrant economy in human history. Tariffs erode consumer and investor confidence, increase red tape and volatility, close markets, and ultimately tarnish the rule of law.
MANUFACTURING HAS STRUGGLED SINCE ‘LIBERATION DAY’
Consider the entrepreneur trying to source materials and find customers in this environment. The tariff schedule runs to thousands of line items, changes without notice, and is riddled with exemptions — available, of course, to those with the right lobbyists. That’s not a trade policy. It’s a rent-seeking machine.
As Americans prepare for Tax Day, we should realize that the current system of tariffs is making the U.S. economy more like the IRS’s tax code — confusing, arbitrary, costly, and unfair. In other words, if you enjoy the complex tax code, you’ll love tariffs. Instead, let’s scrap the tariffs and return to economic freedom and free trade.
Anne Rathbone Bradley is the vice president of academic affairs at The Fund for American Studies, a nonprofit educational organization that works with students and young leaders to promote the principles of free-market economics, limited government, and honorable leadership.
