In an interview<\/a> with Fox News on Sunday, Commerce Secretary Howard Lutnick bragged about the “amazing” revenue that the Trump administration’s tariffs are delivering to the U.S. Treasury.<\/p>\n

“The tariff revenues are amazing: $700 billion a year,” Lutnick told<\/a> Shannon Bream. “That’s just net new money the government never had before. You take that for 10 years, that’s $7 trillion.”<\/p>\n

Ignore, if you can, the still bizarre (but increasingly common) sight of a Republican executive official bragging about how much money the federal government has extracted from the economy. Similarly, try to ignore Lutnick’s questionable calculation of how much revenue the tariffs will generate\u2014the best estimates right now suggest they will generate between $2.5 trillion<\/a> and $2.7 trillion<\/a> over the next decade, not the $7 trillion that Lutnick claims. (But those estimates are tricky things, given the lack of certainty surrounding all of this.)<\/p>\n

Focus instead on the obvious question that Lutnick’s claim ought to bring to mind: Where, exactly, is all that “new money” coming from?<\/p>\n

All taxes are paid by someone, and President Donald Trump’s tariffs are no exception to that rule. The question of who pays and in what amounts is likely to become even more of a focal point in the coming days and weeks, as the White House follows through on its threat to hit imports from dozens of countries with higher tariffs starting on August 1.<\/p>\n

Economic data from the past few months, during which the Trump administration hiked tariffs on goods from Mexico, Canada, China, and elsewhere, provide a preview of what’s to come after the August 1 tariffs hit: Higher prices for Americans.<\/p>\n

That is, of course, what economists say tariffs do. Raising prices is really the only function of a tariff\u2014which artificially inflates the price of imported goods<\/a> to make them less attractive than domestic alternatives. Economists will also tell you that’s not the whole story. They say that domestic producers often raise prices<\/a> as well, since imported competing goods are now more expensive. They also say that tariffs on raw materials and intermediate parts\u2014like the Trump administration’s levies on steel, aluminum, and the parts necessary to build a car\u2014will push up the cost<\/a> of building other, more complex goods, and those higher costs<\/a> will be passed along to consumers in the form of higher prices.<\/p>\n

The impact from tariffs won’t show up in the same way as an income tax or property tax does. It will not be a lump sum or an amount that is removed from your paycheck in a predictable and orderly way. Instead, the estimated $2,400 that the average American household will pay<\/a> in tariff costs will be siphoned away in dribs and drabs, in higher prices<\/a> scattered throughout the economy.<\/p>\n

There have been “relatively quick price responses to tariff announcements,” report a group of economists connected to the Harvard Business School’s Pricing Lab<\/a>, which tracks prices throughout the economy. In a paper<\/a> updated earlier this month, the Harvard economists report that there’s been a “cumulative increase in imported goods prices since early March” of approximately 3 percent. The paper relies on data from four major U.S. retail chains.<\/p>\n