$5.1 billion. That is what General Motors and Ford together absorbed in tariff costs last year — and both expect the bill to keep climbing. So much for foreign countries paying the tab.

One year after President Donald Trump unveiled his “Liberation Day” tariff regime, the numbers are in. They don’t match the pitch.

Trump promised the tariffs would shrink the national debt, revive manufacturing, and make foreign competitors foot the bill. Instead, the US national debt has swollen past $39 trillion, manufacturing spent much of 2025 in contraction, and the costs have landed squarely on American companies and consumers. The average US household is paying roughly $1,000 more per year in tariff costs, according to the Tax Foundation.

The Supreme Court Intervenes

In February, the Supreme Court ruled 6-3 that the International Emergency Economic Powers Act — the legal foundation Trump used to justify most of his Liberation Day tariffs — does not authorize tariffs at all. The ruling invalidated the centerpiece of the trade war and left the government on the hook to refund more than half of the $264 billion it had collected.

The White House scrambled to replace the struck-down duties using Section 122 of the Trade Act of 1974, slapping a 10% tariff on nearly all countries. But those tariffs carry a 150-day expiration date and face their own legal challenges. Erica York, vice president of federal tax policy at the Tax Foundation, put it plainly: “I don’t think we’ll ever get back to Liberation Day levels.”

The effective tariff rate dropped from 16% to 13.7% after the ruling, according to the Budget Lab at Yale — still a fivefold increase from the 2.6% average before 2025.

Detroit Eats the Bill

The auto industry has become the clearest case study in who actually pays tariffs.

Rather than pass costs to consumers already squeezed by gas prices near $4 a gallon, automakers have absorbed billions. GM wrote off $3.1 billion in tariff costs in 2025 and expects another $3 billion to $4 billion this year. Ford took a $2 billion hit and forecasts $2 billion more in 2026 — a figure that would have been $1 billion lower, Ford said, had a fire at a domestic aluminum supplier not forced it to source overseas.

The squeeze shows in the margins. GM’s profitability fell to 6.9% from 8% a year earlier. Ford’s slid to 3.6% from 5.5%. Vehicle sales are projected to decline to an annualized 15.8 million this year from 16.3 million in 2025.

“It’s a tough time to be a car shopper, and it’s a tough time to be an automaker. At the same time it is a tough time to be a dealer, too. Nobody is winning,” said Joseph Yoon, an analyst with Edmunds.

Prices haven’t stood still despite manufacturers holding the line on sticker prices. The average transaction price of a new car hit $49,353 in February — up 3.4% year-over-year, the biggest jump since the inflation spike of 2021-2023.

Housing on Ice

Home builders tell a similar story. Single-family construction fell roughly 7% in 2025, according to the National Association of Home Builders, while residential building material costs ran 3% higher on a yearly basis by February. Robert Dietz, the NAHB’s chief economist, described a capital allocation paralysis — builders unable to commit to land purchases or permits without knowing material costs. “The uncertainty itself is a cost,” he said.

The Trade Map Rewires

Global trade has shifted dramatically — just not in the direction Trump intended.

US imports from China plunged roughly 30% in 2025, with exports falling a similar amount. Chinese goods now represent less than 10% of all US imports, a level not seen since 2000. But the trade deficit with Mexico hit a record $194.6 billion, as imports from America’s southern neighbor rose 4.4%. The total US trade deficit barely moved — falling just $2.1 billion, with the goods deficit actually widening by $25.5 billion.

Dartmouth professor Davin Chor described the US-China decoupling as “very dramatic and very decisive,” but noted it reflects years of corporate contingency planning, not sudden policy victory.

Other allies have been reorienting, too. Canada slashed tariffs on Chinese electric vehicles from 100% to roughly 6.1% — a sharp turn toward Beijing and a direct headache for American automakers. Canadian travel to the US dropped 20%, costing an estimated $4 billion.

Columbia Law School professor Petros Mavroidis pinpointed the diplomatic damage: “How can you ask for co-operative behaviour when you screw them on trade?”

The Court of Public Opinion

The polling is unambiguous. Pew Research Center found that 58% of Americans lack confidence in Trump’s trade decisions; 63% doubt his handling of tariffs specifically. Republicans remain largely supportive at 74% confident. With midterm elections approaching and gas prices compounding cost-of-living frustrations, the politics of protectionism may be shifting under the party’s feet.

The Bottom Line

Tariff revenue did hit $264 billion in calendar year 2025, up from $79 billion the year before. But after accounting for refunds required by law and the economic drag of the tariffs themselves, the Tax Foundation estimates the government netted just $36 billion from the new Section 232 duties. The deficit for fiscal year 2025 was $1.78 trillion — barely improved from $1.82 trillion the year before.

The “Liberation Day” branding promised emancipation from unfair trade. A year of data suggests something more prosaic: a tax increase that fell mostly on the people it was supposed to free.

Sources