US tariffs are taxing the American Dream

Editor's note: Fred Teng is president of AmericaChina. He also serves as an honorary fellow of the Foreign Policy Association, senior advisor to the China-United States Exchange Foundation, executive council member of the Center for China and Globalization, and visiting professor of the School of International Studies, Sichuan University. The article reflects the author's opinions and not necessarily the views of CGTN.

The cost of everyday living is quietly but steadily crushing American families. With grocery bills climbing and inflation refusing to back down, the average household is feeling the weight of policy choices made far from the dinner table. A growing body of evidence suggests that one key driver of these economic pressures is the United States' tariff policy, particularly those enacted during the Trump administration.

Consumer prices rose at an annual rate of 2.9 percent in August, well above the Federal Reserve's inflation target of two percent. It is felt most painfully in the things people need every day. Food, fuel, clothing, and household goods are all becoming more expensive. At a time when wages are not keeping pace, these increases translate directly into anxiety and hardship for millions of families.

One of the clearest signals of this strain comes from the AP-NORC poll showing that the vast majority of Americans are worried about the rising cost of food. That is not just an economic indicator, it is a social alarm bell. When food becomes unaffordable, it erodes a sense of stability and security for ordinary people. This pressure is not abstract, it is personal. Every trip to the supermarket reminds people that their dollar no longer stretches as far as it used to.

The connection between tariffs and inflation is now more than just theory. A new study by Yale University's Budget Lab confirms that current tariff policies are projected to push up prices by an additional 1.8 percent in the short term. That may sound like a small number, but in practical terms it means the average American household will spend an extra $2400 this year just to maintain their current standard of living. That is a serious hit, especially for lower-income families or retirees living on fixed incomes. Tariffs were sold to the public as a way to protect American jobs and punish foreign competitors. In reality, they have functioned as a hidden tax on consumers.

What makes this situation worse is the timing. Americans were hoping for some monetary relief in the form of interest rate cuts by the Federal Reserve. But the stubborn nature of inflation and the recent uptick in CPI forecasts have forced the market to reconsider. Hopes for a rate cut in September, or even later this year, are starting to fade. This leaves households stuck between a rock and a hard place. Prices keep going up, and the usual tools for taming inflation are being held back by the very policies that helped cause it.

It is not hard to understand the political temptation of tariffs. They are easy to explain and look tough on paper. But economics is rarely that simple. The global economy is deeply interconnected, and imposing taxes on imports ends up hurting domestic consumers far more than foreign governments or corporations. When tariffs drive up the cost of imported raw materials or finished goods, businesses either raise prices or cut back. Either way, American workers and families bear the cost.

Many of the tariffs today were imposed by Donald Trump for the purpose of geopolitical tactics. They were not designed with long-term economic health in mind. Now it is time to take a hard look at whether these policies are doing more harm than good. The evidence is mounting, and it is not in Trump's favor.

Inflation is a complex phenomenon with many causes, but there is little doubt that tariffs are playing an outsized role in keeping it alive. Policymakers need to be honest with the public. You cannot say you are fighting inflation while maintaining a system of tariffs that adds directly to consumer costs. If the goal is to ease the pressure on working families, then removing or reducing these trade barriers should be on the table.

Americans are not asking for miracles. They are asking for common sense. If the government wants to help people afford groceries, pay the rent, and save for the future, then it needs to stop making everyday life more expensive. Tariffs may serve a short term political purpose, but their economic toll is becoming impossible to ignore. It is time for a change in direction, one that puts people first, not politics.