UPDATE: President Donald Trump faces a critical decision that could impact the wallets of millions of Americans in 2026. Following a staggering $187 billion increase in tariff revenue in 2025, experts warn that consumers may soon feel the pinch as businesses begin passing these costs onto customers.
New reports confirm that while the tariffs did not significantly raise living costs last year, that could change dramatically within months. According to JPMorgan, businesses, which absorbed around 80% of the tariff costs in 2025, may only shoulder 20% of these expenses as early as this year. “Many 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.
As we ring in the new year, initial price hikes are expected sooner rather than later, particularly for items with low profit margins like groceries. A looming spike in prices presents a challenging scenario for Trump ahead of the midterm elections, raising the stakes on whether he will maintain his current tariff strategy or ease up to alleviate the financial strain on American families.
In a surprising move, Trump delayed significant tariffs on furniture, cabinets, and pasta, signaling a potential shift in strategy as the administration grapples with political vulnerabilities tied to the economic fallout from tariffs.
Why Costs May Rise in 2026
Businesses that stockpiled inventory to avoid higher tariffs last year are quickly depleting their reserves. As these stockpiles diminish, companies must purchase goods at the new, elevated tariff rates, leading to inevitable price increases. Despite inflation pressures squeezing consumer paychecks, businesses will likely struggle to absorb these costs without raising prices, especially in sectors with thin profit margins.
Goldman Sachs economists estimate that tariffs contributed to a 0.5% increase in inflation in 2025, aligning with Federal Reserve Chair Jerome Powell‘s previous statements attributing tariff policies to inflation rates exceeding the central bank’s 2% target. Looking ahead, Goldman predicts inflation could rise by an additional 0.3% in just the first half of 2026.
One grocery supplier, who requested anonymity, indicated that price increases were largely avoided last year due to challenges in determining how to effectively manage varying tariff rates. However, with clarity now emerging, the supplier has opted to apply an average tariff rate across all products.
The X Factor: Supreme Court Decision
A pivotal Supreme Court case could drastically alter the landscape of tariffs in the coming weeks. If the court rules against the Trump administration, businesses may receive refunds on tariffs already paid, potentially curbing further price increases. This decision will be crucial as companies navigate their pricing strategies heading into 2026.
While not guaranteed, a Supreme Court ruling against the administration would limit Trump’s ability to impose additional tariffs without oversight. In light of rising affordability concerns and plummeting favorability ratings, the president has recently backed down on several proposed tariffs, including those affecting produce and household goods.
Trump’s history of fluctuating tariff threats has left many unsure of what to expect. In April, Trump touted record tariffs, only to retract them due to economic pressures. As the administration weighs its options, the potential for further tariff adjustments looms larger than ever.
As Americans prepare for potential price hikes, the upcoming months will be critical in determining how tariffs will reshape their financial futures. With inflation already taking a toll, many will be closely monitoring both the Supreme Court’s decision and Trump’s next moves.
Stay tuned for further updates as this situation unfolds.