According to the latest tracking report from the Tax Foundation, the Trump administration's tariff policies are projected to cost the average American household an additional $900 in 2026, down from as much as $1,000 in 2025. This amount isn't deducted directly from individual accounts under the label of "tariffs" — instead, it quietly enters everyday consumption through higher prices on imported goods and businesses passing along increased costs. For Chinese families living in Austin, running small cross-border businesses, or frequently importing goods from China, this report reveals more than just macro-level numbers — it points to real issues that will affect household budgets and business tax filings.
Tariffs Are Essentially a Consumption Tax — How Heavy Is the Burden on Households in 2026
Many people assume tariffs are simply collected by the government from foreign exporters, but the Tax Foundation's analysis points out that tariffs are actually a tax borne by domestic consumers and businesses. The report estimates that, counting all tariffs already implemented and announced — including Section 122 tariffs, Section 232 tariffs, Section 301 tariffs, and the Section 338 tariffs targeting Canada — the average American household will pay about $900 more in 2026 as a result. For reference, the weighted average applicable tariff rate in the U.S. was only 1.5% in 2022, but it rose as high as 10.8% while the Section 122 tariffs were in effect, and the report projects that once those tariffs expire and other new tariffs fully take effect, the weighted average applicable rate will climb further to 11.8%. The effective tariff rate — which reflects actual amounts collected — already hit its highest level since 1947 in 2025, and is projected to reach 6.6% in 2026, likewise the highest level since 1969.
Behind these numbers lie very real fiscal and economic effects. In 2025, U.S. customs tariff revenue reached $264 billion, a sharp jump from $79 billion in 2024. The report projects that tariffs will generate about $1.6 trillion in nominal revenue between 2026 and 2035, but because tariffs will drag down overall economic growth, net revenue after accounting for negative economic effects will fall to roughly $1.2 trillion; the Section 232 tariffs alone are estimated to reduce long-run GDP by 0.2% and cut about 228,000 jobs. These kinds of structural costs ultimately show up in the prices of goods that rely heavily on imports — electronics, furniture, auto parts, and more — which happen to be common expense categories for many newly immigrated Chinese families settling down and buying homes.
Policy in Flux: Supreme Court Ruling and Frequently Changing Tariff Rules
One of the most notable turning points this year came on February 20, 2026, when the U.S. Supreme Court ruled 6-3 that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs. This stripped the legal basis from the broad tariffs previously implemented under IEEPA, leaving only the Section 232 tariffs in effect. Trump immediately invoked Section 122, imposing a 10% tariff on nearly all trading partners starting February 24, 2026, covering about $1 trillion in goods, or roughly 29% of total imports. However, the Section 122 tariffs have a maximum duration of 150 days and expired on July 24, 2026. Taking their place now are new Section 301 tariffs covering approximately $949 billion (about 28% of total imports), along with the Section 338 tariffs targeting Canada.
The report specifically notes that since the start of Trump's second term, U.S. tariff policy has been adjusted more than 50 times, with the applicable tariff rate briefly peaking after the 2025 "Liberation Day" tariffs were announced and fluctuating significantly ever since. Because the Supreme Court ruled the IEEPA-based tariffs unlawful, about $166 billion in previously collected tariff revenue must now be refunded to taxpayers and businesses. This kind of frequent, large-scale policy reversal poses real challenges for business cost accounting and cash flow planning — and it's a key point we often remind clients of when providing consultations related to our Chinese Tax Filing Guide: the rules that apply this year may already be different by next tax season.
Real-World Impact on Chinese Families and Small Businesses in Austin
Within Austin's Chinese community, many families run cross-border e-commerce operations, Amazon reselling businesses, or small ventures importing goods from China, and the adjustments to Section 301 tariffs have a direct impact on these businesses' purchasing costs and pricing strategies. Even more notably, the report shows that tariff policy has not clearly achieved its original goal of improving the trade imbalance: in 2025, the U.S. trade deficit narrowed by only $2.1 billion, and this improvement mainly came from a widening services trade surplus — the goods trade deficit actually grew by $25.5 billion. In other words, prices for imported everyday consumer goods and components have not become cheaper because of tariff policy; instead, they have come under pressure from rising supply chain costs.
At the same time, as of September 1, 2025, foreign retaliatory tariffs against the United States have already affected about $223 billion worth of U.S. export goods, and if all of these countermeasures are fully implemented, they are projected to reduce long-run U.S. GDP by another 0.2%. For a state like Texas, with its close ties to global trade, Chinese business owners engaged in export-related activities also need to watch for this kind of ripple effect. Rising prices and squeezed business profits are compounded by the report's finding that tariffs have had almost no positive effect on wage levels — meaning households' real purchasing power is being squeezed even further. Under these circumstances, proactively adjusting tax withholding and planning quarterly estimated taxes becomes especially important, and it's a topic our Tax Insights column has continued to track closely in recent months.
YZ CPA Note
For clients running import-related businesses, we recommend keeping documentation for every tariff payment, as these costs can generally be included in Cost of Goods Sold (COGS) for deduction purposes; at the same time, keep a close eye on changes in product classification and tariff rates, and adjust pricing and purchasing strategies accordingly. For ordinary working families, if you notice a clear increase in everyday expenses due to rising prices on imported goods, we recommend reassessing your annual tax withholding amount or quarterly estimated taxes to avoid an unexpected tax bill during filing season. Because tariff policy has changed so frequently this year and the rules could shift again in a short period of time, we recommend that our Chinese American clients in Austin consult with a professional Austin Chinese CPA before making major purchasing, importing, or investment decisions, in order to assess the actual impact on cash flow and tax filings based on the latest policy developments.
For professional tax assistance, please visit our YZ CPA Services page or Contact Us.