“I taxed our groceries so we’d grow our own food again!" – Does Donald Trump understand tariffs?

Few economic tools sound as macho as a tariff. Slap a tax on foreign goods, make America strong, punish the bad guys, and everyone wins – or so the story goes. But as former President Donald Trump gears up for another possible term in office, it's worth asking: does he actually understand how tariffs work?

The Trump Tariff Doctrine

Trump has repeatedly framed tariffs as a kind of easy money-maker for the U.S. In a 2018 tweet, he wrote: “Tariffs are the greatest! Either a country which has treated the United States unfairly negotiates a fair deal, or it gets hit with tariffs. It’s as simple as that – and everybody’s talking! Remember, we are the ‘piggy bank’ that’s being robbed."

In May 2024, speaking at a campaign rally, he stated: “We made billions and billions of dollars off China. I put a tariff on their goods, and they paid us like never before.”

On the surface, that sounds like a win. In reality, it misunderstands the basic function of a tariff: it's a tax on imports, paid by U.S. companies, and passed on to U.S. consumers.

How Tariffs Actually Work

Imagine this: you go to the supermarket, and suddenly apples from abroad cost 25% more. That's because the U.S. government taxed them at the border. The foreign exporter doesn't pay that tax – the American importer does. And guess who picks up the tab in the end? You, the shopper.

Tariffs can be useful in targeted, strategic scenarios – for example, to protect emerging industries or punish unfair trade practices. But they are a blunt tool with side effects. The Trump administration's 2018 tariffs on steel and aluminium raised input costs for U.S. manufacturers and led to job losses in downstream industries like auto manufacturing.

According to the Peterson Institute for International Economics, the Trump-era tariffs cost American consumers and companies around $57 billion annually in increased costs. Meanwhile, countries like China retaliated by slapping tariffs on U.S. agricultural products, devastating American farmers. The Trump administration had to bail them out with $28 billion in subsidies between 2018 and 2019.

"Made in America" – But Can It Be?

Trump often implies that tariffs will force a revival of American industry. In theory, higher import costs make domestic alternatives more attractive. But this only works if those alternatives exist and can scale fast.

The problem? The U.S. no longer makes many of the goods it imports. Clothes, electronics, furniture, machinery – much of this production moved abroad decades ago. Rebuilding that capability would require massive investment, workforce training, and years of consistent policy support.

Instead, the result of Trump’s tariffs has mostly been higher prices without a corresponding manufacturing renaissance. A 2019 study by the Federal Reserve Board found that while certain sectors saw a slight uptick in domestic production, the overall impact was negative for the U.S. economy.

The 2025 Auto Tariffs: A Case Study in Chaos

In March 2025, Trump announced a sweeping 25% tariff on all foreign car imports, including vehicles and parts. The move sent shockwaves through the global auto industry, wiping billions from the stock values of manufacturers in Japan, Germany, and the UK. Even U.S. giants like General Motors and Ford saw massive hits, with GM shares falling over 7% and estimated tariff-related costs projected to exceed $10.5 billion.

Interestingly, Tesla shares held steady. But even Elon Musk, a vocal Trump ally, admitted, "Important to note that Tesla is NOT unscathed here. The cost impact is not trivial."

Despite Tesla's domestic manufacturing reputation, only around 70% of its Model Y parts are made in the U.S. Patrick Masterson, lead researcher for Cars.com, noted, "No vehicle is 100% US-made. The consumer is going to feel it across the board."

The tariffs are expected to affect $300–400 billion worth of imports and could raise vehicle prices by $4,000 to $12,000. Some luxury brands like Ferrari have already announced a 10% price hike. Other companies are considering pulling models from the U.S. market entirely, reducing consumer choice.

Oxford Economics warned that redirecting production to the U.S. may protect some jobs domestically but would result in significantly lower production abroad, with global job losses and trade friction as a result.

A Catchy Line, A Costly Policy

Trump's messaging on tariffs is pure political gold: easy to chant, easy to understand, and heavy on the nationalism. But the economic reality is murkier. As one critic put it, it's like saying, "I taxed our groceries so we'd grow our own food again!" – catchy, sure, but detached from practical reality.

Tariffs are not free money. They're taxes that consumers pay. They don't guarantee jobs, and they can trigger trade wars that hurt the very people they claim to protect. So when Trump says, "They pay us," he's telling a story. But it's one that economists, farmers, and factory workers have paid a high price to correct.

Conclusion

Donald Trump may understand how tariffs play on a political stage. But whether he grasps the full economic consequences is far less clear. What is clear: for all the talk of winning, many Americans ended up paying more – and getting less.