Money Talks News may earn commission or revenue through links in the content below. Our editorial team independently selects all products. Compensation does not influence our recommendations.
Costco just announced it has collected $184 million in tariff refunds from Washington, and it expects more (1). Here’s the detail that matters: The government can only send those refunds to the importer of record — the American company that actually paid the tariff in the first place (2).
That’s a problem for President Donald Trump, who has insisted for years that other countries pay his tariffs. You can’t get a refund on a bill somebody else paid.
I’ve been a CPA since 1981, and I spent more than a decade on Wall Street. I don’t care who you voted for. I do care whether the numbers add up.
On tariffs, they don’t. The Federal Reserve Bank of New York found that Americans shouldered 94% of tariff costs through August 2025 (3). Germany’s Kiel Institute, after combing through more than 25 million shipment records, put the American share at 96% (4).
To be fair, politicians of every stripe mangle economics. But Trump makes big money claims more often than most, and some of them collapse the moment you pick up a calculator. Here are five — plus where he has a point, and what each one means for your wallet.
1. “It’s going to be a cost to another country”
Campaigning in September 2024, Trump told supporters his tariffs wouldn’t cost them a thing — another country would pay (3). He’s repeated versions of that line ever since.
Here’s how a tariff actually works. When a container of Chinese sneakers or German auto parts lands at a U.S. port, Customs sends the bill to the American importer. That company can eat the cost, squeeze its foreign supplier, or raise prices on you.
The research says it mostly raises prices on you. The nonpartisan Tax Foundation figures the tariffs worked out to a $1,000 tax increase per household in 2025, with another $1,300 expected this year (3).
Where he has a point: Foreign sellers do absorb some of the hit, and that share can grow over time. By November 2025, the New York Fed found American pass-through had slipped to 86%, meaning foreigners were covering roughly 14% (3). That’s real. It’s also nowhere near “all.”
What it means for you: You’ve been paying a hidden tax at the checkout line, so every other leak in your budget matters more. Forgotten streaming services, free trials that never ended, bills that creep up every year — recurring charges are the easiest money leak to miss. Want to plug the leaks? Rocket Money connects securely to your accounts and puts every subscription on one screen — cancel the ones you don’t want in a few taps.
It negotiates cable, internet, and phone bills and flags fee hikes before they hit. Ten minutes could stop the leak for good. See every subscription now.
2. Tariffs will let you stop paying income tax
At a Cabinet meeting last December, Trump predicted that tariff money would soon pour in so fast that Americans wouldn’t even have an income tax to pay (5). He’s floated the idea repeatedly, including at this year’s State of the Union (6).
This is the one that makes the CPA in me wince. The federal income tax raised about $2.4 trillion in 2024 (5).
Tariffs? If today’s tariffs stayed in place all year, the Tax Foundation estimated they’d bring in about $191 billion in 2026 (5). That’s less than a tenth of what we’d need. And the higher you push tariffs, the fewer goods get imported, so the revenue shrinks right when you need more.
Where he has a point: Tariffs really did fund most of the federal government in the 1800s. The catch is that Washington spent a bit more than 2% of GDP back then, compared with nearly 23% in 2023, according to the Tax Foundation (6). That’s a different country.
What it means for you: Don’t build your retirement plan around the IRS going away. Taxes will likely remain one of your biggest lifetime expenses, and smart planning is how you shrink them. A fiduciary advisor can help, and it’s easier than ever to find one. For example, SmartAsset instantly matches you with up to three fiduciary advisors — legally required to prioritize your interests. In addition to investment advice, they spot tax savings, Social Security strategies, and planning gaps you’d never see alone.
$100K+ in investments? Get matched free in minutes.
Quick gut-check — if your money advice is coming from random online influencers, you’re playing a dangerous game. I’ve been a CPA since 1981 and writing about money since before the internet existed. Sign up for the free Money Talks Newsletter and get expert advice that’s been tested by time.
3. “If the economy crashed, you could make a deal” on the national debt
This one goes back to May 2016. CNBC asked candidate Trump whether the U.S. has to repay its debt at 100 cents on the dollar. He answered that he’d borrow knowing that if the economy crashed, you could make a deal — the same way he’d negotiated discounts on his own business debts (7).
The U.S. government always pays its debts, in full and on time. That promise is why Treasurys are the bedrock of the entire global financial system.
Even hinting that bondholders might take a haircut would make every lender demand more interest. And Treasury rates ripple into what you pay on mortgages, car loans and credit cards.
Where he has a point: He walked it back within days. He told The Wall Street Journal the bonds are “absolutely sacred” and said he only meant buying back debt at a discount when rates rise (7). The Treasury does run buyback programs, so that part isn’t crazy (8).
But his cleanup came with its own head-scratcher: You never have to default, he said, because you print the money (8). Technically true. It’s also how you get runaway inflation, which is just default by another name for anyone holding dollars.
4. Cutting drug prices “by 1,500%”
Last year, Trump started boasting that his “most favored nation” drug-pricing policy had cut prices by as much as 1,500% (9). He’s used numbers from 500% to 1,500% at event after event (10).
Here’s the math problem. Cut a price by 100%, and it’s free. Anything beyond that means the drug company pays you to take its pills. A health economist at Washington University in St. Louis noted that a 500% cut would turn a $100 prescription into negative $400 (10).
Where he has a point: Americans genuinely pay far more than people in other wealthy countries for many of the same drugs. Trump himself has said we sometimes pay 10 times more (10). If a U.S. price is 10 times higher, cutting it to match would be a 90% cut. That would be huge — no exaggeration required.
What it means for you: Until prices actually come down, the smartest move is paying for medical costs with pretax dollars. Health Savings Accounts are the only triple tax-advantaged accounts going: Contributions cut your taxable income, growth is tax-free, and withdrawals for medical costs are tax-free too. Unlike an FSA, the money never expires.
Lively HSAs charge no monthly account fees, and your balance can be invested for long-term growth. On a high-deductible health plan, not yet on Medicare? Open your free HSA today.
5. Our trade deficit means we’re “subsidizing” Canada
Trump has repeatedly claimed the U.S. subsidizes Canada to the tune of $200 billion a year (11). The White House has said that figure blends the trade deficit with U.S. military spending (11).
Start with the size. The actual 2024 U.S. trade deficit with Canada for goods and services combined was about $35.7 billion (11). The bigger error is calling it a subsidy at all.
A trade deficit just means we bought more from Canada than it bought from us. We got oil, lumber and car parts in return. One Peterson Institute economist compared it to claiming he loses $25,000 a year to the supermarket where he buys his groceries (12).
Where he has a point: The goods-only gap is bigger, somewhere between about $63 billion and $71 billion (11). And it’s fair to question whether any trading relationship is balanced. A trade gap simply isn’t a gift.
What it means for you: You run a trade deficit with your grocery store, your doctor and your utility company. That’s fine, as long as you’re getting good value for what you spend. The same test applies to countries.
The bottom line
Every politician, from both parties, will eventually promise you something for nothing. Free money from foreigners. No more income tax. Drugs so cheap they pay you.
When you hear a promise like that, do what I’ve done for 45 years: Grab a calculator and check it. The math doesn’t care who you voted for. Neither should your money.
Sources: 1. Yahoo Finance; 2. CBS News; 3. USA Today via Yahoo Finance; 4. Time; 5. PBS News; 6. CNBC; 7. PolitiFact; 8. Committee for a Responsible Federal Budget; 9. Associated Press via U.S. News; 10. CNN; 11. Associated Press via MarketBeat; 12. CNN via Yahoo News
Add a Comment