President Donald Trump is calling tariffs an economic triumph. When he came into office for a second time, he implemented sweeping tariff reforms in the name of putting America first.
Economists and state officials have raised concerns that tariffs hurt the consumer, largely due to many imported goods charging higher prices, which can eat into the wallets of businesses and households across America. Reactions to the impact of tariffs on the economy have been mixed.
Over the weekend, the president posted to Truth Social that “tariffs have made our Country Rich, Strong, Powerful, and Safe.” Later in his post, he pressed the Supreme Court to rule in his favor relating to emergency tariff powers. (1, 2)
But governors across the country are reporting impacts that differ from the White House’s assessment. Here’s what they’re saying.
In his recent post, Trump said, “Stock Market and 401k’s have hit an all-time high, Inflation, Prices and Taxes are DOWN.” (3)
The stock market has soared in the last year, and 401(k) balances have risen to an average balance of $144,400, which is a record high. Plus, the number of 401(k) millionaires has climbed to a record high, with more than 889,000 401(k) millionaires as of September 2025. (4, 5, 6)
But prices aren’t down. The latest data from the U.S. Bureau of Labor Statistics showed an inflation rate of 3.0%. Some categories with spiking costs include food, with food at home costing 2.7% more than this time last year and food away from home costing 3.7% more than last year. Electricity prices are also up 5.1% from last year. (7)
A recent survey of Colorado businesses found that the effects of import taxes have had negative financial impacts on their business. Additionally, the governor of Michigan’s office recently found that the state’s residents are facing higher grocery prices, more expensive housing, and uncertain employment due to tariffs. (8, 9)
It is worth noting that the economy is complex. As the impacts of tariffs ripple through the economy, other factors, like employment, interest rates and more can come into play and affect the economic state of the country.
Some impacts have been more directly linked to tariff costs. For example, in California, the governor’s office reported that businesses in the state incurred $11.3 billion in tariff costs from January to May 2025, which represents the highest burden of any state in the country. (10)
Tariffs are creating economic headwinds in Texas. The Federal Reserve Bank of Dallas has noted that the Texas economy is cooling in the face of tariff uncertainties. The president of the Texas Business Leadership Council, Justin Yancy, recently wrote in a press release that, “the imposition of these tariffs on our neighboring countries will disrupt supply chains, increase costs for businesses and families, and create unnecessary barriers to economic cooperation.” (11, 12)
The current overall effective tariff rate of 18.6% is the highest since 1934. (13)
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Some estimate that the costs of these tariffs amount to an average tax increase of $1,100 per household. Analysts say this burden may fall more heavily on lower-income households. (14)
Beyond household budgets, tariffs might impact the country’s economic outlook, too. According to the Tax Foundation, the tariffs implemented in 2025 add up to the largest U.S. tax increase as a percentage of Gross Domestic Product (GDP) since 1993. In the long run, the Yale Budget Lab expects the impacts of these tariffs to shrink the U.S. economy by 0.4%. (15, 16)
Of course, some goods are hit harder by price increases than others. For example, apparel, coffee, tea and cameras have each seen prices rise by over 7%. Likewise, some sectors are seeing more impacts than others. (17)
For example, manufacturing might expand by 2.5% but the construction sector is expected to shrink by 3.8%. The agriculture industry is already seeing the impacts of tariffs on commodities like soybeans, with prices going up in response to retaliatory tariffs put in place by China. (18, 19, 20)
As you map out your budget, it’s a good idea to expect prices for common household goods to continue rising. If you are struggling to keep up with rising costs, it might be a good time to start making swaps or cutting out certain purchases. For example, the fast-rising prices of household furniture might mean that making due with your current couch is what works for your budget. Or opting to swap out ground beef for a less expensive alternative.
As an investor, the changing reality for businesses could lead to varying returns. For example, companies with domestic supply chains and in-country operations might outperform companies that depend more heavily on imports. Diving into the details of a particular company’s operations to confirm they are optimized for the current conditions might make sense before choosing to invest your hard-earned dollars.
As the data continues to shift, the most practical approach is to stay attentive to how prices are moving in your own community, keep some flexibility in your budget and investments, and prepare for a landscape where the economic impact of tariffs may evolve long before the political debate around them is resolved.
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Yahoo Finance (1, 4,); Brennan Center for Justice (2); The Hill (3); American Society of Pension Professionals & Actuaries (5); Empower (6); Bureau of Labor Statistics (7, 17); Canon City Daily Record (8); Michigan.gov (9); Governor Gavin Newsom (10); Federal Reserve Bank of Dallas (11); Texas Business Leadership Council (12); The Budget Lab (13, 16, 19); Tax Foundation (14, 15, 18); Reuters (20)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
