Instead of immediately passing tariff costs to consumers, US corporations are initially absorbing the shock. They are mitigating the impact by reducing labor costs and accepting lower profitability, which explains the lag between tariff implementation and broad consumer inflation.

Ford builds over 80% of its US-sold vehicles domestically. However, this scale requires importing the most parts, so US tariffs on parts penalize Ford more heavily than companies that import whole vehicles at a lower effective tariff rate, creating a competitive disadvantage.

Tariffs are a direct tax paid by the domestic importer, period. This functions as a significant, unacknowledged fiscal tightening by massively increasing the corporate tax bill. This drain on the economy is a primary driver of the current recessionary impulse, contrary to political narratives.

Building hardware compliant with US defense standards (NDAA) presents a major cost hurdle. Marine robotics company CSATS notes that switching from a mass-produced Chinese component to a US-made alternative can increase the price by 8x to 15x, a significant economic challenge for re-shoring manufacturing.

Tariffs are politically useful in a fiscal crisis because they function as a hidden consumption tax. They allow politicians to claim they're taxing foreigners and protecting the nation, while the revenue raised is insufficient to solve the debt problem and domestic consumers bear the cost.

Robert Kaplan cautions against dismissing inflation risks. Many businesses are still absorbing tariff costs or working through pre-tariff inventory. He believes the full price impact will be passed on to consumers in 2026, potentially keeping inflation stickier than markets currently expect.

To fund modernization, the Port of Alaska must raise its own tariffs (fees). However, if fees get too high, shippers of non-urgent goods like cars might switch to cheaper barges. This would reduce the port's overall tonnage, forcing it to raise fees even higher on remaining customers to cover its debt, creating a potential 'death spiral'.

Tariffs are creating a stagflationary effect on the economy. This is visible in PMI data, which shows muted business activity while the "prices paid" component remains high. This combination of slowing growth and rising costs acts as a significant "speed break" on the economy without stopping it entirely.

Far from being a precise tool against China, recent US tariffs act as a blunt instrument that harms America's own interests. They tax raw materials and machine tools needed for domestic production and hit allies harder than adversaries. This alienates partners, disrupts supply chains, and pushes the world towards a 'World Minus One' economic coalition excluding the US.