What is a tariff?

A tariff is a tax that a government charges on goods imported from another country. It is collected at the border by the country's customs agency the moment the goods arrive. Most tariffs are charged as a percentage of the product's value — a 25% tariff on a $100 imported item adds $25 in tax.

Governments use tariffs for three main reasons: to raise revenue, to protect domestic industries by making foreign products more expensive than locally made ones, and to gain leverage in negotiations, since the threat of a tariff can pressure another country into a deal. The Trump administration has used tariffs for all three purposes, but especially as a negotiating tool.

Who actually pays tariffs?

This is the single most misunderstood part of the debate. Tariffs are often described as money paid by another country. In reality, the foreign government pays nothing. The tariff is paid by the U.S. business that imports the product — the "importer of record" — directly to the U.S. Treasury.

What happens next decides who really bears the cost. An importer facing a higher tax can absorb it and accept smaller profits, push the foreign supplier to lower prices, or raise the price it charges American customers. In practice, analyses of the 2025–2026 tariffs found that most of the cost has been passed down the supply chain to consumers.

Economists have put numbers on this. Estimates of the added cost to a typical American household in 2026 range from around $960 to $1,500 per year, depending on the model and which tariffs are counted. The average tariff rate on all imports has climbed from about 2.5% in early 2025 to roughly 10–12% in mid-2026 — one of the fastest increases in modern U.S. history.

What tariffs has Trump imposed?

Note: U.S. tariff policy has changed rapidly and often. The rates below reflect the situation as of July 2026 and are likely to keep shifting as court cases and trade deals develop.

Trump made tariffs a centerpiece of his second term. In April 2025 he announced sweeping "reciprocal" tariffs on more than 80 countries — nicknamed the "Liberation Day" tariffs — using emergency powers under a law known as IEEPA (the International Emergency Economic Powers Act).

Those broad tariffs did not survive. On February 20, 2026, the Supreme Court ruled 6–3 that IEEPA does not give the president authority to impose tariffs, striking the reciprocal tariffs down. In response, the administration invoked a different law — Section 122 of the Trade Act of 1974 — to keep a 10% across-the-board tariff on most imports. That stopgap took effect in late February 2026 and was set to expire on July 24, 2026 unless Congress extended it.

Several other tariffs were untouched by the Supreme Court decision, because they rest on different laws:

Trade deals have also reshaped the picture. A U.S.–EU agreement that took effect July 1, 2026 caps most European goods at a 15% tariff, and a truce with China extended reduced rates into late 2026. Because these tariffs sit on top of one another, the total rate on a single product can be higher than any single announcement suggests.

Why the legal fight matters

The alphabet soup of "Section 122," "Section 232," and "IEEPA" matters because each law comes with different rules and different staying power. IEEPA tariffs were fast to impose but were struck down. Section 122 allows temporary tariffs, but only for 150 days without an act of Congress. Section 232 and Section 301 tariffs are slower to set up but far more durable, with no automatic expiration.

That is why, as the temporary Section 122 tariff neared its expiration in mid-2026, the administration launched new Section 301 investigations covering most U.S. imports — an effort to rebuild a broad tariff wall on firmer legal ground. The direction of U.S. tariff policy therefore depends heavily on court rulings and on which legal tools survive challenge.

How tariffs affect prices

Tariffs raise prices in three ways. Directly, imported goods cost more. Indirectly, American-made products that rely on imported materials — a car built with tariffed steel, for example — also get more expensive. And through retaliation: when the U.S. taxes another country's goods, that country often taxes U.S. exports in return, which hurts American exporters such as farmers.

Supporters argue tariffs protect American jobs, revive domestic manufacturing, and give the U.S. leverage in trade talks. Critics argue they act as a hidden tax on consumers, raise costs for businesses that depend on imports, and invite retaliation without reliably shrinking the trade deficit. Most economic studies of the 2025–2026 tariffs found higher consumer costs alongside limited change in the overall trade balance, though the long-term effects remain debated.

A short history of U.S. tariffs

Tariffs are not new. For much of the 1800s they were the federal government's main source of revenue, before the income tax existed. The most infamous example is the Smoot-Hawley Tariff of 1930, which raised U.S. tariffs sharply during the Great Depression and triggered retaliation that deepened the global downturn — a case still cited as a warning about trade wars. After World War II, the U.S. led decades of agreements that lowered tariffs worldwide. Trump's second term marks a sharp reversal of that long trend.