American shoppers have been living on borrowed time. For months, businesses absorbed the bulk of the Trump administration's sweeping tariff increases, protecting consumers from the full impact of what amounts to the largest tax increase on imports in a century. According to JPMorgan analysts, that buffer is about to collapse.

The stark warning comes as the United States collected $187 billion more in tariff revenue in 2025 than in 2024—a nearly 200% increase that represents one of the most dramatic shifts in trade policy in modern American history. So far, businesses have swallowed roughly 80% of those costs through reduced margins, efficiency improvements, and strategic inventory management.

That 80% could shrink to just 20% later this year, JPMorgan warns, as companies exhaust their capacity to absorb the hit.

The Math of Tariff Pass-Through

The mechanics are straightforward but the implications are significant. When the U.S. imposes a 25% tariff on imported goods, someone pays that cost. Initially, many businesses chose to absorb the expense rather than risk losing customers to competitors or dampening demand.

But margin compression has limits. After more than a year of elevated tariffs, companies across sectors are signaling that further absorption is unsustainable:

  • Retailers: Major chains have warned investors that price increases are coming as they anniversary the initial tariff implementations without finding alternative suppliers.
  • Manufacturers: Companies reliant on imported components face the choice of raising prices, moving production, or accepting permanently lower profitability.
  • Consumer Goods: From appliances to apparel, categories heavily dependent on imports are seeing cost pressures build.

"Mostly businesses 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."

— JPMorgan analysts

The Household Impact

The Tax Foundation estimates that current tariff levels amount to an average tax increase of $1,100 per U.S. household for 2025, rising to $1,500 in 2026 as pass-through accelerates. For middle-class families already stretched by years of elevated inflation, the additional burden could prove challenging.

The impact won't be distributed evenly:

  • Lower-income households spend a larger share of their income on consumer goods subject to tariffs, making the burden regressive in practice.
  • Rural communities often have fewer retail options, reducing their ability to shop around for better prices.
  • Families with children face elevated costs on categories like clothing, toys, and school supplies that are heavily import-dependent.

Current Tariff Levels

The scope of tariffs currently in effect is extensive:

  • China: Complex rates with recent exemptions on 178 products extended through November 2026, following a truce after threatened rates exceeded 100%.
  • Canada: 35% tariffs on most goods, though the USMCA agreement exempts the majority of exports.
  • Mexico: 30% base tariff with significant USMCA exemptions covering approximately 75% of exports.
  • Global: 50% levy on imported metals and 25% on non-U.S. automobiles.

The Legal Uncertainty

Adding complexity to corporate planning, the legal foundation for many tariffs remains unsettled. The Court of International Trade declared several executive orders implementing tariffs invalid last May, and the Supreme Court has yet to rule on whether the administration's use of emergency powers to impose tariffs passes constitutional muster.

A ruling against the tariffs could trigger refund claims potentially exceeding $133 billion—the largest in trade history. However, companies cannot count on that outcome and must price products based on current policy reality.

How Consumers Can Prepare

With cost increases likely across many consumer categories, households can take several steps to manage the impact:

  • Buy Durable Goods Early: If major purchases like appliances are planned for later this year, buying sooner rather than later may lock in current prices.
  • Consider American-Made Alternatives: Products manufactured domestically aren't subject to import tariffs, though they may carry their own premium.
  • Watch Store Brands: Retailers' private-label products sometimes offer better value as national brands pass through costs more aggressively.
  • Budget for Higher Prices: Adjusting household budgets now to account for 5-10% increases in affected categories can prevent surprises.

The Broader Economic Picture

The tariff cost shift arrives at a delicate moment for the U.S. economy. Consumer spending has remained resilient despite years of inflation, but household financial cushions have thinned. Credit card debt exceeds $1.2 trillion, and savings rates remain below pre-pandemic levels.

Economists warn that aggressive tariff pass-through could dampen consumer spending, potentially slowing economic growth at a time when the Federal Reserve is already navigating a narrow path between inflation control and recession prevention.

For American households, the message is clear: the tariff bill is coming due, and consumers will increasingly be the ones paying it.