It’s now official: Americans are the ones footing the bill for “the most beautiful word in the dictionary.”
A recent German study has now been echoed by the Federal Reserve Bank of New York. The numbers are in - and they are not kind to the theory that tariffs are paid by China.
You remember the pitch. The vision was grand: China would be writing massive checks to the U.S. Treasury. Billions would roll in. We’d pay down the national debt. Maybe even replace income taxes.
As Donald Trump put it: “We’re going to be taking in billions of dollars… we’ll be able to pay down our debt.”
There was just one tiny problem. One minute of research clarifies that tariffs are collected by U.S. Customs from American importers. China does not write checks to Scott Bessent. The American companies bringing goods into the country do.
The only way this wouldn’t hurt American consumers is if foreign manufacturers lowered their prices enough to offset the tariff. If they absorbed the tax, the retail price here would stay roughly the same.
That didn’t happen.
The Kiel Institute in Germany found that foreign exporters reduced prices only marginally - meaning roughly 96% of the tariff cost was borne by Americans. The New York Fed’s February 2026 report was only slightly more generous, estimating that Americans absorbed between 86% and 94% of the tariff cost.
In plain English: for every dollar the Trump administration claimed they were “taking” from China, Americans were handing over about 90 cents.
The “Dividend” That Would Cost You a Fortune
The crowning flourish was the promised “Tariff Dividend.” In a November 9, 2025 Truth Social post, Trump proposed sending $2,000 checks to Americans, funded by tariff revenue.
It’s clever politics: take $3,000 out of a family’s left pocket through higher prices at Walmart, then hand back $2,000 in a “dividend” and wait for applause.
And the budget arithmetic is stubborn.
Sending $2,000 checks to roughly 150 million Americans would require about $300 billion. Tariff collections have been well below that level.
If a “dividend” ever arrives, it won’t be a windfall from Beijing. It will be money Americans effectively prepaid through higher prices - and then borrowed back from their own government.
As Trump said on October 25, 2024, tariffs are “the most beautiful word in the dictionary.”
Apparently, in this dictionary, “beautiful” means “expensive.”
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The director of the National Economic Council, Kevin Hassett, went after the authors of the New York Fed study on Feb. 18, saying “the people associated with this paper should presumably be disciplined,” and calling it “the worst paper I’ve ever seen in the history of the Federal Reserve System.” What he didn’t address was the broader body of research - including work by the CBO and multiple academic teams - that reached the same conclusion as the New York Fed: Americans, not foreign exporters, are paying the tariffs. Meanwhile, does threatening language enhance Hassett's credibility? No.