DENVER — The tariffs imposed by the Trump administration over the past year have pushed the weighted average U.S. tariff rate to 13.5%, up from 1.5% in 2022, according to the Tax Foundation, a nonpartisan tax policy research organization founded in 1937. That nine-fold increase represents the largest U.S. tax increase as a percentage of GDP since 1993 and translates to an estimated $1,300 in additional annual costs per American household in 2026.
For Colorado families earning the state’s median household income of roughly $97,000 and paying some of the highest housing costs in the nation, those added costs land on budgets that are already stretched. And the share borne by American consumers may be growing.
The headline estimate comes from the Tax Foundation, which projects the average household cost at $1,300 for 2026, up from $1,000 in 2025. The Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, puts the figure higher at roughly $2,100 per household for the same period. The difference stems from modeling assumptions; both organizations are widely cited by policymakers of both parties.
These costs do not appear as a line item on a receipt. They are embedded in higher prices for goods across the economy, from appliances and clothing to building materials and vehicles. The Congressional Budget Office, the nonpartisan agency that provides official budget projections to Congress, estimates that tariffs have added 0.4 percentage points to annual inflation in both 2025 and 2026.
One factor that could dramatically change the picture: the U.S. Supreme Court is considering whether to overturn the administration’s use of emergency powers under the International Emergency Economic Powers Act to impose tariffs. If the court strikes down those IEEPA-based tariffs, the Tax Foundation estimates the per-household cost would drop to $400 and the weighted average rate would fall to 6.4%.
The administration has argued that trade partners absorb much of the tariff cost through reduced profit margins. A February 12 study from the Federal Reserve Bank of New York tested that claim against the data and found the opposite: U.S. consumers and businesses paid nearly 90% of the $264 billion in tariff costs collected in 2025. Foreign exporters bore roughly 10%.
The breakdown shifted slightly over the year. From January through August 2025, 94% of costs fell on U.S. importers. By November, that share had eased to 86%, with foreign exporters absorbing 14%. The Fed researchers found that during the first eight months, foreign exporters “did not lower their prices at all.”
The cost burden also does not fall evenly across income levels. The Yale Budget Lab, a nonpartisan research center at Yale University, found that under the April reciprocal tariffs, households in the second-lowest income group lose 2.3% of disposable income, compared with 0.9% for the top income decile. That makes the tariff structure roughly 2.6 times more regressive than a flat tax.
Businesses have been absorbing a significant share of the cost so far. J.P. Morgan Research estimated that U.S. consumers paid about one-third of the tariff bill in 2025, with foreign exporters and U.S. businesses sharing the remaining two-thirds. Companies can absorb more than they could during the 2018-2019 tariff rounds because corporate profit margins are roughly 60% higher today. But J.P. Morgan warns that as margins compress later in 2026, consumers would begin paying a much larger share directly.
Tariff rates vary sharply by product category. Penn Wharton Budget Model data from the University of Pennsylvania shows steel and aluminum facing the highest effective rate at 39.8%, followed by goods from China at 34.7%. Automotive imports carry a 15.3% effective rate; a 25% tariff on imported vehicles could add $2,500 to $20,000 to the price of a car depending on type and size.
Consumer goods seeing the sharpest price increases include:
Electronics. Prices on electronics and appliances could rise 30% to 40%, with laptops and smartphones facing potential increases of 40% to 50%, according to CNN Business tracking data. A new semiconductor tariff took effect January 15, 2026.
Clothing and footwear. Apparel prices are rising an estimated 17% under all current tariffs, according to the Yale Budget Lab. Leather goods such as shoes and handbags could see short-term increases of 23%, settling to 7% longer term.
Home appliances. Major appliance prices are rising more than twice as fast as overall inflation, according to the Brookings Institution. A basic refrigerator that cost $650 could now run closer to $776.
Furniture. Tariffs on kitchen cabinets, vanities, and upholstered wooden furniture were set to increase on January 1, 2026, with cabinets and vanities rising from 25% to 50% and upholstered furniture from 25% to 30%. However, President Trump signed a proclamation on December 31, 2025 delaying those increases to January 1, 2027; the current rate remains 25%, according to NAHB reporting on the delay and Brookings research on residential construction impacts.
For Colorado families, the sharpest intersection between tariff costs and daily life may be housing. The state ranks among the most expensive in the nation for housing costs, and tariffs on construction materials are making the problem worse.
Colorado’s effective tariff rate has increased sevenfold, from 3.0% to 21.0% since 2024, according to a Colorado State University Regional Economic Development Institute report. The 25% tariff on steel and aluminum, combined with a 10% tariff on softwood lumber, compounds costs for builders in a market where the Denver metro median home price already sits between $580,000 and $599,000.
The National Association of Home Builders, which describes its mission as striving “to protect the American Dream of housing opportunities for all,” reported in an April 2025 survey that tariffs have added an average of $10,900 per new home. Builder confidence has fallen below breakeven every month in 2025, with sentiment dropping into the high 30s by the fourth quarter.
The Brookings Institution estimates that tariffs add roughly $30 billion in total costs to residential construction investment nationwide, with approximately 90% of those costs falling on new home construction, including apartments. The national housing deficit already stands at 3.7 million to 4.9 million units.
The Colorado Office of State Planning and Budgeting had anticipated a 3.9% increase in housing permits for 2025 but revised the projection down to 0.5% after tariffs took effect. A projected 7.7% rebound for 2026 is now uncertain. Colorado regional press has reported an estimated 4,500 to 5,000 jobs at risk in metal-using sectors, especially construction.
Supporters of the tariff strategy argue that short-term consumer costs are the price of achieving long-term strategic objectives.
The administration frames the tariffs as necessary to reshore manufacturing, reduce dependence on adversarial supply chains, and address persistent trade deficits it characterizes as a national security threat. Billions of dollars in reshoring investment announcements have followed the tariff actions. New Section 232 investigations have been launched into pharmaceuticals, rare earths, aircraft, drones, and robotics. Semiconductor fabrication plants are being built domestically under a combination of CHIPS Act incentives and tariff pressure.
On revenue, the tariffs collected $264 billion in 2025, a near-200% increase over the prior year, according to the Federal Reserve Bank of New York. The CBO projects that tariffs will reduce federal deficits by $3.0 trillion over the 2025-2035 period, including interest savings. That revenue is being used to offset tax cuts in the One Big Beautiful Bill Act reconciliation package.
The Coalition for Prosperous America, a pro-tariff organization, has disputed the Tax Foundation’s per-household figure as “economic malpractice,” arguing it ignores reshoring benefits, domestic production gains, and the strategic value of reducing dependence on China.
China’s share of U.S. imports has dropped from 15% to below 10%, a significant shift. However, the Fed study notes that much of that trade moved to Mexico and Vietnam rather than returning to U.S. production.
Several data points complicate the reshoring narrative. Blue-collar manufacturing employment declined by 59,000 jobs in late 2025, the first such drop since the pandemic, according to the Tax Foundation. As of August 2025, 409,000 manufacturing positions remained unfilled, and projections suggest the industry may need 3.8 million new workers by 2033, with 1.9 million at risk of going unfilled.
The tax cut offset is also a moving target. The Tax Foundation had estimated that the One Big Beautiful Bill Act would increase average household returns by roughly $1,000. A $1,300 tariff cost risks offsetting “much of the economic benefits” of that tax package, Newsweek reported.
In Colorado specifically, 86% of businesses surveyed by CSU REDI reported tariffs as “challenges,” while 14% cited benefits. Business planning confidence collapsed from 8.7 out of 10 to 2.4 out of 10 after tariff implementation, according to the Governor’s Office tariff impact report. Colorado’s General Fund revenue is projected to come in $241 million to $448 million less than 2024 levels due to tariff-related economic effects.
Colorado agriculture faces a double squeeze. Input costs have surged since 2020: fertilizer up 37%, seed up 18%, fuel and oil up 32%, and labor up nearly 50%. At the same time, retaliatory tariffs from trading partners have pushed foreign buyers of Colorado wheat and beef to seek alternatives. San Luis Valley potato farmers are reporting production costs of $8 to $11 per hundredweight against returns of $5 to $6, resulting in losses of roughly $150,000 per crop circle, according to the CSU REDI report.
Not all the agricultural news is negative. A new trade agreement with Japan has opened a market for Colorado potatoes, demonstrating that some of the bilateral deals accompanying the tariff strategy can produce targeted gains.
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