US economy outlook: Trump's tariffs spared Americans in 2025 — but how will 2026 feel?

Americans may have enjoyed some short-term relief in 2025, as President Donald Trump’s tariffs did not immediately drive up living costs. But for 2026 could bring a different picture, economists have warned, with prices expected to rise as businesses start passing the additional tariff costs on to consumers.

Last year, United States collected $187 billion more in tariff revenue than the previous year, almost a 200% increase, according to CNN. Businesses bore most of this burden, covering roughly 80% of the cost. That figure, however, is expected to drop as companies transfer expenses to customers.


“A lot of our clients really didn’t want to pass the costs on, but now they’re really having to,” Kyle Peacock, principal at Peacock Tariff Consulting said. He added that some firms implemented price increases at the start of the year, while others plan to raise prices later in the first or second quarter. Products with slim profit margins, including groceries, may be among the first to see increases.

Businesses’ pricing decisions are further haunted by the last year's inventory strategies.

Many firms stockpiled goods early in the year to avoid higher tariffs, which at one point reached 145% on Chinese imports. With those supplies running out, companies must now buy products with higher levies, which they can only absorb temporarily, according to CNN.

Goldman Sachs economists estimated that tariffs added half a percentage point to inflation in 2025, proving US Federal Reserve Chair Jerome Powell’s statement that tariffs accounted for all inflation above the 2% target.

Goldman predicted a further three-tenths of a percentage point rise in inflation in the first six months of 2026.

The rising costs place Trump in a difficult position ahead of the midterm elections: maintain tariffs or scale them back to ease the strain on households. The president has previously reversed tariff threats multiple times, leading to the acronym TACO, “Trump Always Chickens Out,” trending on Wall Street.

As 2026 began, the US president has already delayed tariffs on furniture, cabinets, and Italian pasta. The White House gave little explanation for the pause, analysts suggest that it reflects the administration’s awareness of the political risks tariffs pose.

There is one cushion that can protect Americans from price hikes. the Supreme Court case, that can strike down Trump’s broadest tariffs, which had raised $130 billion in revenue by 14 December. Peacock said businesses’ pricing choices will heavily depend on the court’s ruling, expected in the coming weeks.

Trump has already rolled back several tariffs, on produce, furniture, cabinets, pasta, and has previously made exemptions for products including smartphones and auto parts, limiting the impact on American consumers.