Media Forced To Admit Trump's Tariffs Are Working As Revenues Spike

The debate is raging this week over increased government spending and the potential raising of the debt ceiling by $5 trillion, with many fiscal conservatives splitting with the GOP and the Trump Administration over what they feel is a betrayal of their campaign promises to reduce government waste. 

Trump argues that all the elements included in his "big beautiful bill" are necessary in order to revitalize the US economy and break from the interdependency of the current globalist model.  Can the dollar continue to absorb the pressure of ever increasing debt obligations?  Is there a way to cut the debt without cutting spending?

At least one aspect of Trump's fiscal plan is showing success in this area despite the warnings of critics; the establishment media has been forced to admit that the administration's tariff efforts are actually working.

The US has collected over $121 billion in revenues from tariffs on imported goods, and despite claims that tariffs are a "tax on the consumer", prices on the shelf have not risen so far.  Opponents of the policy are struggling to explain the data.  Some still argue that disaster is right around the corner while others are acknowledging that there is a potential to pay off US debt over time if the import duties remain in place for the long term.

Misconceptions about tariffs lead the public to believe that they are a tax on foreign producers or governments, but tariffs are in fact taxes on companies sourcing products internationally from nations on the duties list.  The taxes place the responsibility of adaptation on corporations - If they buy more from US sources or countries not on the list, then their costs will remain low.  If they don't, then they must shift the costs in other ways. 

Raising prices is the last thing any company not producing necessities wants to do.  Consumers can easily cut back on peripheral goods.  In other words, the assertion that tariffs are a hidden tax on the public is rooted in a lack of understanding on import duties and how they affect markets.  Consumers will buy from producers that keep prices down by adapting to the tariffs, and there are many ways to adapt.  It's that simple.    

Democrats and some conservatives argued that prices would rise exponentially as international corporations immediately deferred costs on consumers in order to offset the added expenses on imported raw materials and manufactured goods.  They were wrong.  

The personal consumption expenditures price index, the Federal Reserve's preferred inflation gauge, rose 2.3% in May, modestly above the central bank's 2% annual target. The May Consumer Price Index rose at an annual rate of 2.4%, cooler than economists expected.

Some blame the "front loading" of imports (increased orders of goods before the tariffs went into effect).  However, front loading was estimated to act as a stop-gap for only two months (possibly three by some predictions).  Tariffs were initiated in February and though there have been fluctuations it's been five months waiting for the tariff asteroid to explode American wallets and nothing has happened.

Will companies eventually shift the tariff burden on American consumers over the next year?  A better question would be can they shift the burden in a weaker retail market?  Would they take the risk of plunging sales?  Or will they do what they should have been doing all along:  Buy a larger percentage of their goods from US producers and bring manufacturing back home?      

At the current rate, tariffs could generate around $300 billion by the end of this year and $1.2 trillion over the next four years.  It's not enough to offset increased debt spending, but it does offer an alternative to hiking taxes on the general public (which is what Democrats would do).  And if inflation concerns continue to prove over-hyped, then the tariff model could remain in place for many years to come.