For the month of June 2025, the federal government collected about $20 billion more in tariffs on imports than it did in the same month in 2024 (US Treasury). That would be an annual incremental increase of $240 billion.
But we also know that the Trump tariff policy is still in formation, as we have seen with the recent announcement after President Trump’s July 22 meeting with Philippines President Marcos and his July 27 agreement with the EU. The flow of tariff news continues (see https://tariffcheck.org/updates), and the August 1 deadline looms.
The latest estimates indicate that the tariff policy shock will exceed $300 billion a year. Will that be an accurate number? Nobody knows.
But we do know that tariffs are a tax. And we do know that they are collected by customs agents at the time the goods enter the US. And we do know they are remitted to the US Treasury. So a politician can say the tariff is on this country or that country, but the truth is that tariffs are a sales tax imposed on the domestic American consumer within the boundaries of the United States.
Some readers have asked for a way to understand this impact. It is a fair question, since there hasn’t been a tariff initiative like Trump’s since the Great Depression era under President Hoover, with the Smoot-Hawley tariffs of that period.
With this request in mind, we selected a way to quantify the tariff shock in simple terms, utilizing a commodity that is widely known and broadly consumed: gasoline.
The most recent data from the US Energy Information Administration (EIA) indicates that total US gasoline consumption in 2024 was 134.6 billion gallons. This figure is derived from the “products supplied” metric, which closely approximates actual consumption. This is consistent with prior years, where consumption hovered around 134–136 billion gallons annually (also EIA). Therefore, each additional penny per gallon added to the gasoline price results in a policy shock of about $1.35 billion per year ($0.01 x 135 billion gallons).
Then, dividing the estimated $300 billion/year tariff policy shock by $1.35 billion/(penny/gallon), we find that the Trump tariff policy appears to generate an economic shock equivalent to a tax increase of over $2 a gallon on gasoline.
Think about that in terms of the “hit” ahead for the US economy.
(Images sourced from Shutterstock)
