Trump Falsely Claims Tariffs Are 'Paid for by Foreign Countries' in State of the Union

In his 2026 State of the Union, Trump repeated his long-standing false claim that tariffs are 'paid for by foreign countries,' stating they could 'substantially replace the modern-day system of income tax.' In reality, tariff payments are made by U.S. importers, who frequently pass costs on to consumers. A Federal Reserve Bank of New York analysis found that over 90% of Trump's 2025 tariffs were passed onto U.S. consumers and businesses, with importers bearing 94% of tariff costs. Furthermore, tariff revenues accounted for less than 4% of federal revenue ($195 billion), compared to 84% from income and payroll taxes. Income taxes generated roughly 13 times more revenue than tariffs.

“As time goes by, I believe that tariffs, paid for by foreign countries, will substantially replace the modern-day system of income tax.” — State of the Union address to joint session of Congress, February 24, 2026