You've probably heard the shouting matches by now. On one side, tariffs are a "beautiful" tool to rebuild the American heartland. On the other, they’re a "hidden tax" that’s going to make your morning coffee cost five bucks.
Honestly, the truth isn't sitting in either of those extremes.
It’s January 2026. We’ve had a full year of the "Tariff King" being back in the Oval Office, and the data is finally starting to roll in. It’s messy. It’s weird. And it definitely isn't what the textbook economists predicted would happen by now.
So, is Trump right about tariffs? The answer depends entirely on which part of the economy you’re standing in.
The Revenue Reality: $164 Billion and Counting
One thing Trump was absolutely right about is that tariffs raise a boatload of cash. Fast.
In 2025 alone, the U.S. Treasury pulled in record-breaking sums. We're talking about an annualized jump of roughly $180 billion in customs duties compared to 2024. For a government staring down a massive deficit, that kind of liquidity is like finding a stack of twenties in an old jacket.
Trump's logic is basically this: Why tax American workers' income when you can tax foreign companies trying to sell stuff here?
But here’s the "gotcha" that most people miss: The Laffer Effect. Economists like Kimberly Clausing have pointed out that you can’t just keep hiking tariffs and expect the revenue to go up forever. Eventually, people just stop buying the expensive imported stuff. When the volume of trade drops, the tax revenue drops with it.
Why Inflation Didn’t Explode (Yet)
If you listened to the 2024 campaign trail, experts were screaming that 10% or 20% across-the-board tariffs would send inflation to the moon.
That didn't quite happen. At least, not the way they feared.
In early 2026, the Consumer Price Index (CPI) has stayed relatively stubborn around 3%. It’s not great, but it’s not the 10% hyperinflation some predicted. Why? Because businesses are "eating" the costs.
👉 See also: The Emails I Can Send That Actually Get a Response
I talked to a guy named J.B. Brown who runs a metal foundry in Indiana. He told me that instead of raising prices on his customers immediately, he’s just slashed his own profit margins to stay competitive. He’s not alone. The Federal Reserve’s latest "Beige Book" shows that many companies are absorbing the tariff hits because they're scared of losing customers who are already tapped out.
But that buffer is wearing thin. As 2025’s "pre-tariff" inventory runs out, experts like Gary Clyde Hufbauer expect a jump toward 3.5% inflation by mid-2026. The bill is coming due; it’s just taking the scenic route.
The Manufacturing Mismatch: Jobs vs. Robots
This is where the "Is he right?" question gets really uncomfortable.
Trump’s main goal was to reshore jobs. He wanted the smoke stacks rising again in Ohio and Pennsylvania. But the 2025 data shows a weird trend: manufacturing output actually rose by about 2.5%, but the number of jobs didn't follow.
Why? Automation.
When a company moves a factory back to the U.S. to avoid a 50% tariff on Chinese goods, they aren't hiring 5,000 people. They’re buying 500 high-tech robots. The labor market in 2025 was actually the weakest we've seen since the pandemic, with manufacturing employment declining even as "AI optimism" kept the stock market afloat.
Basically, the tariffs are working to bring the work back, but the workers are being left behind by technology.
The Greenland and Europe Factor
You can't talk about 2026 without mentioning the "Greenland Tariffs."
Trump's move to slap duties on European industrial goods as leverage for strategic assets (like critical minerals) has turned the trade war into a three-front battle. While China remains the primary target, the EU is now feeling the squeeze.
- The Winner: China. (Ironically). While U.S. tariffs hit Chinese exports, Beijing just pivoted. They grew their exports to Africa by 25% and Southeast Asia by 13%.
- The Loser: The American Homebuyer. Tariffs on lumber, steel, and copper added roughly $17,500 to the cost of building a new home last year.
The Center for American Progress estimates we'll see 450,000 fewer homes built by 2030 because of these supply costs. If you're trying to buy your first house, Trump’s tariffs feel like a direct hit to your savings account.
The Supreme Court Wildcard
Everything I just told you could be deleted by June.
The U.S. Supreme Court is currently weighing whether the President actually has the power to use the International Emergency Economic Powers Act (IEEPA) to bypass Congress and set these rates.
🔗 Read more: Why Use a 907 for a High One? Breaking Down the Mechanics of This Specific Scaffolding Clamp
If they rule against him, the government might have to refund over $135 billion to importers. That would be absolute chaos for the federal budget.
What This Actually Means for You
So, is he right?
He’s right that tariffs provide massive leverage in negotiations. He’s right that they generate revenue without a "direct" income tax hike.
But he’s arguably wrong that they are "free money." They act like termites—slowly eating away at the foundations of the construction and manufacturing industries while the surface (the stock market) still looks shiny.
Actionable Steps for the "Tariff Era":
- Lock in Big Purchases: If you’re planning on a new car or a major home renovation, do it before the "pre-tariff" inventories are totally gone. The price hikes expected in Q3 2026 will be steeper than what we see today.
- Watch the "Made in USA" Stocks: Companies with entirely domestic supply chains are the massive winners here. They aren't paying the duties, but they are raising their prices slightly to match their "importing" competitors, leading to fat profit margins.
- Diversify Your Portfolio: Don't bet solely on U.S. retail. The "Laffer Effect" suggests consumer spending might dip as these costs finally hit the shelf. Look into sectors like AI and Data Centers that have been specifically exempted from the harshest duties.
The trade war isn't a "win" or a "loss" yet. It’s a massive, expensive experiment in reshaping the global map. Whether the high cost of entry is worth the long-term independence of the American supply chain is a question we'll still be asking in 2030.