Love, Actually

A tariff fairy tale

Last night, in the State of the Union, Trump said this:

“As time goes by, I believe the tariffs, paid for by foreign countries, will, like in the past, substantially replace the modern-day system of income tax, taking a great financial burden off the people that I love.”

That raises an obvious question: Who does he love?

Here’s a clue: it’s not you.

But it could be some of the billionaires in the inauguration photo above.

Tariffs are not paid by foreign countries. They’re collected here - from American importers. No matter how many times he tells that lie, it won’t come true. That’s why over 1,000 American companies are suing for refunds. You don’t see China filing claims to get its money back.

When American companies pay tariffs, they have two choices: cut profits or raise prices.

And as time goes by - to borrow his phrase - they raise prices. More and more of the cost gets passed through until most (or all) of it lands where it always does:

On consumers. On you.

Tariffs function like a national sales tax. And sales taxes are regressive. Working- and middle-class families spend a larger share of their income just to live - on food, clothes, appliances, cars. So they end up paying a larger share of the bill.

Income taxes, by contrast, are progressive. Those who have benefited most from the stability, infrastructure, and markets of the American system pay higher rates.

Swap income taxes for tariffs and you shift the burden down the ladder.

Taxes go down for billionaires.

Prices go up for everyone else.

So when he talks about lifting “a great financial burden off the people that I love,” listen carefully.

Because he’s telling you exactly who he means.

Notes:

According to estimates from the Tax Foundation and Yale’s Budget Lab, the 2025 tariffs amounted to a roughly $1,000 to $1,500 “hidden tax” on the average American household.

It wouldn’t work anyway… In 2025, the U.S. collected about $2.6 trillion in individual income taxes. Tariffs, even at their peak last year, only brought in about $195 billion.

Last Friday (February 20, 2026), the Supreme Court ruled 6-3 that Trump’s broad tariffs were actually unconstitutional taxes - on Americans, not foreign countries.

P.S. We can’t ignore the other whopper: “America is respected again, perhaps like never before.”

If that’s true, it’s news to our allies - and to the markets.