The U.S. just pulled in a record $22.3 billion in tariff revenue in May 2025. That’s the highest monthly total ever. If you’re looking at that news alongside the previous month’s inflation numbers, you might be thinking that tariffs are doing what the administration said they would do. Revenue’s up. Inflation rates are coming down. So, what’s the problem? Well... maybe everything.
I work for a large retailer in sourcing and this could not be more true of our daily lives. Inventory is bought in bulk at a “lower” tariff, canceled, moved to different seasons. Costs are increasing, retails are going up, and categories are getting cut from stores for being too expensive. Very well done article explaining the realities of tariffs!
I really appreciate you sharing your experience, and I can only imagine the scrambling that is going on at big retailers. I imagine Supply Chain majors have been working overtime the past few weeks.
My very first thought upon opening today's post was "man, I wish people understood deadweight loss", and then, later in the article, BAM, a whole thing about DWL. Beautiful.
"In other words, we’re not trading more. We’re just spending more to trade less." Very well said.
Tariff taxes are paid by everyone who consumes the tariffed products. Everyone then has skin in the game; no free lunches. Similar to the VAT the rest of the world uses.
That’s not quite accurate. Tariffs are paid at the border when goods enter the country, regardless of when (or if) they’re eventually sold. A business could import a product, pay the tariff upfront, and then hold that inventory for months before it reaches a customer. That could be a hefty cost for a company to incur.
VATs are collected in stages along the supply chain and ultimately at the point of sale. They’re tied to transactions, not border entry. VATs also apply equally to domestically produced and imported goods, whereas tariffs apply only to imports.
So while both are forms of taxation, they operate very differently in terms of timing, scope, and who ultimately bears the cost.
I work for a large retailer in sourcing and this could not be more true of our daily lives. Inventory is bought in bulk at a “lower” tariff, canceled, moved to different seasons. Costs are increasing, retails are going up, and categories are getting cut from stores for being too expensive. Very well done article explaining the realities of tariffs!
I really appreciate you sharing your experience, and I can only imagine the scrambling that is going on at big retailers. I imagine Supply Chain majors have been working overtime the past few weeks.
My very first thought upon opening today's post was "man, I wish people understood deadweight loss", and then, later in the article, BAM, a whole thing about DWL. Beautiful.
"In other words, we’re not trading more. We’re just spending more to trade less." Very well said.
I try real hard to avoid graphs, but this was a great chance to explain the most confusing one in principles.
Great post as always.
Tariff taxes are paid by everyone who consumes the tariffed products. Everyone then has skin in the game; no free lunches. Similar to the VAT the rest of the world uses.
That’s not quite accurate. Tariffs are paid at the border when goods enter the country, regardless of when (or if) they’re eventually sold. A business could import a product, pay the tariff upfront, and then hold that inventory for months before it reaches a customer. That could be a hefty cost for a company to incur.
VATs are collected in stages along the supply chain and ultimately at the point of sale. They’re tied to transactions, not border entry. VATs also apply equally to domestically produced and imported goods, whereas tariffs apply only to imports.
So while both are forms of taxation, they operate very differently in terms of timing, scope, and who ultimately bears the cost.