Tax Foundation: Trump Tariffs Will Cost Households $900 in 2026, Down From $1,000 in 2025

The bill keeps coming, just from a different legal angle

American households paid an average of $1,000 more in 2025 because of President Trump's tariffs, according to economists Erica York and Alex Durante of the Tax Foundation. Their latest estimate puts the 2026 cost at $900 per household.

That's a real number with real consequences for grocery bills, car prices, and anything built with imported steel, aluminum, or parts. According to the Tax Foundation, the 2026 figure results from a legal shell game that has nothing to do with the administration losing its appetite for tariffs.

Courts keep saying no. The White House keeps finding new laws to try.

In February, the Supreme Court ruled that the International Emergency Economic Powers Act does not authorize the president to impose tariffs, according to Reason. That torpedoed the sweeping "Liberation Day" tariffs Trump had imposed under IEEPA in 2025.

The administration pivoted to Section 122 tariffs, a 10 percent duty that can only stay in place for 150 days under the law. The U.S. Court of International Trade ruled in May that even those didn't qualify, because the law requires a balance-of-payments deficit that didn't exist. The Section 122 tariffs expired on July 24 anyway, per Reason's reporting.

On July 23, one day before that expiration, the White House announced new tariffs under Section 301 of the Trade Act of 1974, framed as "Relief from Unfair Trade Practices" tied to investigations into 60 economies over forced-labor practices in their supply chains, according to Reason's account of the administration's own announcement. Reason notes the timing: "We're supposed to believe that the timing is just coincidental, which is a hard sell."

The sequence is notable. One tariff authority dies in court, a new one appears on the White House's desk almost immediately, invoking a different statute. Section 301 has survived legal scrutiny before. Presidents have used it since the 1970s, and unlike IEEPA, it explicitly authorizes tariffs, according to the Tax Foundation.

The tariff rate is still historically high

Before the Supreme Court's ruling, the Tax Foundation estimates the weighted-average applied tariff rate on U.S. imports hit 15.2 percent. With the Section 122 tariffs in effect, that rate sat at 10.8 percent. Once Section 122 expires and the Section 232 pharmaceutical tariffs, Section 301 tariffs, and the Section 338 tariff on Canada all kick in, the Tax Foundation projects the rate climbs back to 11.8 percent.

For comparison, the World Bank pegged the weighted-average applied tariff at just 1.5 percent in 2022. The Tax Foundation says the actual average effective tariff rate for 2026 will hit 6.6 percent, the highest since 1969.

Customs duties brought in $264 billion for the federal government in calendar year 2025, up from $79 billion in 2024, according to the Tax Foundation. But that revenue figure is misleading on its own. With the IEEPA tariffs ruled illegal, the government owes roughly $166 billion in refunds tied to duties collected under that now-void authority. Tariffs also mechanically shrink income and payroll tax collections, since they raise costs and squeeze the tax base those levies apply to.

Canada gets hit hardest, and the trade deficit argument doesn't hold up

Trump slapped 50-percent duties on some Canadian imports in recent weeks, according to Reason, on top of the broader tariff regime. Lawmakers are also weighing bipartisan legislation that would hand Trump enhanced trade powers aimed at punishing countries that trade with Russia, Reason reports, meaning the tariff toolkit could expand again regardless of how the Section 301 fight in court turns out.

One of Trump's stated goals is shrinking the U.S. trade deficit. The Tax Foundation's analysis pushes back on that logic. A country's trade balance reflects the gap between domestic saving and domestic investment, not tariff policy. The U.S. invests more than it saves domestically, which requires capital inflows from the rest of the world, according to the Tax Foundation. Tariffs don't change that underlying saving-investment gap, so they can't permanently fix the trade balance. The U.S. hasn't run a trade surplus since 1975.

The unresolved question is whether Section 301 tariffs survive the same legal gauntlet that killed IEEPA and Section 122. The Tax Foundation notes Section 301 has firmer statutory footing than IEEPA. But that doesn't guarantee this specific application, tied to forced-labor investigations announced one day before a competing tariff authority expired, holds up if challenged in court. Until then, American households are the ones paying the $900 tab.