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Tariffs and Tax Refunds
Kerby Anderson
You have probably heard the phrase, “the government giveth and the government taketh away.” That is an apt description of taxes and tariffs in 2026. Many Americans have been pleasantly surprised by the tax refunds they have received this year because of the tax cuts inserted into the One Big Beautiful Bill. No taxes on tips, overtime, and Social Security provided many Americans with a significant check from the IRS.
Unfortunately, while the government was putting money back in the pockets of U.S. taxpayers with tax refunds, it was also taking money out through tariffs that increased prices Americans pay. Former Senator Phil Gramm is one of the co-authors of “The Trump Tax Increase of 2026.”
The Congressional Budget Office (CBO) estimated that the tariffs implemented during the Trump administration will generate $331 billion this year. But the new tax cuts will only save taxpayers $230 billion. One of the themes in this election is affordability. By October, the office estimates that these new tariffs have cost American consumers and businesses $443 billion, while the tax cuts will have provided them with $379 billion.
One question that is always asked about tariffs is, who pays? The CBO estimates that businesses are absorbing about 30 percent of the cost of tariffs. Consumers are paying the remaining 70 percent.
Another question is, how will this affect the midterm elections? Defenders of the tariff policies argue that the tax cuts provide new benefits. Perhaps, but voters often have short memories.
Affordability is a major issue, especially with the Iran war’s impact on supply chains. The president’s tariffs have made prices higher.
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