Tariffs could really sting in 2026. Unless Trump chickens out again

 It’s cold comfort for Americans gloomy about the state of the US economy, but President Donald Trump’s sweeping tariffs didn’t dramatically raise the cost of living in 2025. That could change in 2026.

The United States collected $187 billion more in tariff revenue in 2025 than it did in 2024, a nearly 200% increase. Who paid all that? Mostly businesses, which footed roughly 80% of the tariff bill last year.

But businesses are starting to pass those costs along to customers, and that 80% could shrink to 20% later this year, according to JPMorgan.

“A lot of our clients really didn’t want to pass the costs on, but now they’re really having to,” said Kyle Peacock, principal at Peacock Tariff Consulting. Many have opted to do so immediately at the start of the new year, while others are planning to wait until later in the first or second quarter, he said.

Items with low profit margins, including groceries, may be among the first to rise next year.

A looming spike in prices sets up a tricky decision for Trump ahead of the midterm elections: stay the course on tariffs or ease up to give some relief to Americans who are struggling with the high cost of living.

Trump has reversed his tariffs threats many times before – so much that the acronym TACO (“Trump Always Chickens Out”) trended on Wall Street for much of the summer.

to get ahead of future tariff increases. That helped soften the blow from levies, which, at one point, started at 145% for goods coming from China. As those stockpiles ran out, businesses had to start purchasing goods with the higher tariffs, and they can eat that cost for only so long.

To remain competitive, businesses – no matter their size – aren’t going to increase prices by as much as the tariffs they’re paying on imported goods, Peacock said. With inflation taking a bigger bite out of people’s paychecks – which are growing much more slowly than they had been in recent years – businesses have much less leverage to raise prices.

So how much more should you prepare to pay in 2026 because of tariffs? That depends on what you’re buying. Ultimately the price increases that arise will likely vary significantly by category and product. For example, grocers typically operate with thin profit margins per product, which gives them less of an ability to absorb tariffs.