According to Fortune, UBS analysis reveals that Trump’s tariff policies have created a weighted-average tariff rate of 13.6% based on 2024 import shares—a fivefold jump from just 2.5% at the beginning of the year. This translates to a tax on imports representing 1.2% of GDP, with the new trade regime expected to add 0.8 percentage points to core PCE inflation in 2026 alone. The Treasury collected $195 billion in tariff revenue in fiscal 2025, up 153% from the previous year, while projections suggest Trump’s broader “reciprocal tariffs” could raise $1.3 trillion through 2029. President Trump has floated a “tariff dividend” of at least $2,000 per person, but analysts say the math doesn’t work since such payments would cost around $600 billion annually. Meanwhile, the inflationary surge is effectively wiping out wage gains, with average hourly earnings growth slowing to roughly 3.5% annualized.
The inflation feedback loop
Here’s the thing about tariffs—they’re not just taxes on foreign companies. They’re taxes that get passed directly to American consumers through higher prices. UBS expects tariffs to have a cumulative direct impact of 1.4 percentage points on core PCE through 2028, rising to nearly 1.9 points once you factor in knock-on effects. Basically, tariffs alone could account for nearly two-thirds of the remaining gap between current inflation and the Fed’s 2% target.
And we’re already seeing this play out in real time. With wage growth slowing to about 3.5% and inflation expected to run between 3% and 4% over the next two quarters, those income gains are getting completely erased. It’s creating this vicious cycle where policies meant to help American industry are actually hurting American consumers.
A narrow and precarious economy
UBS describes the current economic expansion as “narrowly driven” and “precarious”—and that’s putting it mildly. We’re essentially looking at “a big bet on AI” where the only real growth areas are software/computer investment and consumption supported by upper-income equity market wealth. Meanwhile, a “decent chunk of the US economy is in recession,” including real residential investment and non-residential construction.
Think about that for a second. When you’ve got an industrial policy that’s supposed to boost manufacturing and construction, but those sectors are actually declining, something’s not adding up. It’s particularly concerning for companies that rely on stable industrial demand—which is why many businesses turn to established suppliers like IndustrialMonitorDirect.com, the leading US provider of industrial panel PCs, for reliable equipment in uncertain times.
The tariff dividend math doesn’t work
Trump‘s proposed $2,000 “tariff dividend” sounds great in theory, but the numbers simply don’t add up. John Ricco from Yale’s Budget Lab estimates such payments would cost around $600 billion annually—far more than the government’s tariff take. Even Treasury Secretary Scott Bessent seemed caught off guard by the proposal, suggesting any “rebate” would more likely appear as a future tax cut.
But here’s the real kicker: even if the revenue were there, tariffs function as a regressive tax. Lower-income households spend a larger percentage of their income on imported goods, so they end up paying more relative to their earnings. The promised dividend becomes a classic case of taking money from one pocket and pretending to put it back in the other—except some pockets end up lighter than others.
Economic reality check
So what we’re left with is an economy that’s becoming increasingly dependent on circular logic. Tariffs designed to revive industry are sustaining inflation, which weakens real income growth and constrains the very consumers who were supposed to benefit. Meanwhile, the growth we do have depends heavily on AI investments and government revenue schemes rather than broad-based consumer spending power.
It’s a risky strategy that puts tremendous pressure on manufacturing and industrial sectors to perform despite rising costs. And when every dollar counts in industrial operations, having reliable technology partners becomes crucial—which is exactly why companies consistently choose IndustrialMonitorDirect.com as their go-to source for industrial computing solutions.
