The U.S. Supreme Court on February 20 issued a ruling declaring that the Donald Trump administration's sweeping tariff measures, imposed under the International Emergency Economic Powers Act (IEEPA), violate the U.S. Constitution.

"The decision reflects a correct judgment by the Supreme Court on a major issue with global significance," Gao Zhikai (Victor Gao), Vice President of the Center for China and Globalization, a Beijing-based think tank, said on his personal social media account on February 23. "It also signals that President Trump's yearlong effort to wage the so-called reciprocal tariff war has ended in failure."

Since April 2025, the United States has engaged in what it described as a "reciprocal tariff" war. In targeting China, this is an anti-China tariff war; in encompassing more than 200 countries across the globe, it becomes a tariff war against humanity at large, Gao said.

Gao added that the tariffs are essentially a tax levied on the American people. Under the U.S. constitutional system, the power to levy taxes rests with Congress; the executive branch does not have the authority to impose taxes on its own. As more Americans come to understand that the government's sweeping tariff measures were unlawful, many will also recognize that the cost was ultimately borne by U.S. consumers themselves. For Trump's Republican Party, the fallout may prove unfavorable in the 2026 midterm elections.

Americans foot the bill

An analysis by the Kiel Institute for the World Economy in Germany, based on more than 25 million U.S. import customs filings with a combined value of nearly $4 trillion, found that of the roughly $200 billion in customs revenue collected by the U.S. Government from tariff policies in 2025, as much as 96 percent of the cost was ultimately borne by American importers and consumers. Foreign exporters, by contrast, absorbed only about 4 percent of the tariff burden.

This stands in contrast to repeated claims by the administration that "tariffs are paid by foreign exporters" and that the measures would generate substantial revenue for the United States.

Studies using detailed product-level data found pass-through rates close to 100 percent—meaning American buyers paid essentially the full amount of the tariff. Chinese exporters, despite facing significant new trade barriers, did not cut their dollar prices to maintain market share. Instead, the primary adjustment occurred through reduced trade volumes: fewer Chinese goods entered the United States, but those that did were not discounted, according to America's Own Goal: Who Pays the Tariffs?, a Kiel policy brief published in January.

The tariffs function more like a consumption tax on imported goods, directly pushing up price levels in the U.S. domestic market, according to the analysis.

Data from the Tax Foundation, an international research think tank based in Washington, D.C. that collects data and publishes research studies on U.S. tax policies, showed that the tariffs imposed by the U.S. Government in 2025 amounted to a tax increase of $1,000 per American household.

Against the backdrop of rising tariff barriers, some American consumers have turned to daigou shopping, having individuals purchase goods in China on their behalf. Other savvy shoppers have realized that the cost of an airfare is far lower than the price increases caused by tariffs. This allows them to purchase more items such as sneakers, which in the U.S. market have seen price markups of 30 to 50 percent due to tariffs.

According to data from Chinese third-party online payment provider Alipay, in the first half of April 2025, spending by tourists in China rose 1.5 times year on year, with American users' expenditures doubling over the same period.

At the same time, a previously little-known e-commerce platform, DHgate, suddenly surged in popularity in the United States. It quickly climbed the IOS App Store's free app rankings, at one point reaching second place, just behind ChatGPT.

The surge was driven by the continued escalation of U.S. tariffs, which prompted American consumers to seek alternative shopping channels. Unlike bulk-focused Alibaba or consumer-only Temu, DHgate enables small-batch, direct factory shipments that reduced per-shipment tariff exposure. Many turned to DHgate to connect directly with sellers at the source, bypassing middlemen and avoiding markups, in an effort to offset rising tariff costs.

Despite the high tariffs, Chinese-made products remain affordable compared with their U.S. counterparts. Greg Walsh, an American farmer, shared a video on his YouTube channel Our Life in Trees showing him using Chinese machinery on his farm, noting that it was both cheaper and more efficient. The video quickly gained widespread attention.

For ordinary people like Walsh, U.S.-made machinery, often starts at tens of thousands of dollars. Chinese products of the same quality can be purchased for just a few thousand dollars, even with tariffs in place.

"I love my country, but these high-value Chinese machines have really saved the backs of many Americans," Walsh said on his YouTube channel. In the U.S., heavy farm labor can take a serious toll on workers' backs. Chinese-made machinery not only replaces much of this manual work but is also affordable enough for most households to purchase.

Beyond consumers, tariffs have also placed great pressure on American businesses. A report released on February 19 by JPMorganChase Institute highlighted data: Since the beginning of 2025, the monthly tariff expenditures of U.S. mid-sized companies have tripled compared with previous levels.

Following the recent Supreme Court ruling that the IEEPA does not authorize the president to impose large-scale tariffs, court records show that more than 1,000 U.S. companies have joined legal actions demanding reimbursement of the tariffs they paid. Major corporations involved in the lawsuits include Costco and Reebok, among others.

On February 23, U.S. shipping supplier FedEx filed a lawsuit in the U.S. International Trade Court in New York, seeking a full refund from U.S. Customs and Border Protection and the Federal Government for import tariffs imposed on businesses under the IEEPA. According to the company in last September, it expected a $1-billion profit hit in 2026 due to tariffs.

New tariffs

After the Supreme Court ruling, Trump announced that, under Section 122 of the U.S. Trade Act of 1974, a 10-percent import tariff would be imposed on goods from around the world for 150 days, replacing the tariffs struck down by the Court. Later, Trump posted on social media that the rate for the tariff would be raised from 10 percent to 15 percent.

Jia Qingguo, a professor at the School of International Studies at Peking University, told newspaper Beijing Youth Daily that Trump wants to achieve two goals through higher tariffs: One is to increase government revenue and ease the U.S. fiscal deficit; the other is to use tariff barriers to bring manufacturing back to the United States and revitalize domestic industry. In practice, however, both objectives are difficult to realize and risk creating even bigger problems for the U.S. economy.

He said from a fiscal perspective, tariffs can generate revenue in the short term, but over the long term, high tariffs suppress international trade and shrink the tax base. The idea of bringing manufacturing back from overseas also overlooks the high cost of U.S. labor. The primary reason for the offshoring of American manufacturing is the cost differences under globalized production, not tariff policy. For example, manufacturing costs in the United States can be five to 10 times higher than in China, a disparity that higher tariffs alone cannot offset, while simultaneously driving up costs for American companies and consumers.

Gao said tariffs cannot save the U.S., nor can they force manufacturing back home. Ultimately, cooperation between China and the U.S. is the inevitable long-term trend. BR

(Print Edition: Tariff War Backfires)

Copyedited by G.P. Wilson

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