New tariffs have shrunk Illinois’ economy and cost households $2,200 per year

The definition of insanity is doing the same thing over and over again and expecting different results.

In 2025, the Trump administration announced sweeping across-the-board tariffs that it claimed would restore American manufacturing, create jobs, and grow the economy. Back in February, the U.S. Supreme Court struck down most of those levies as unconstitutional. But last month, the administration doubled down, preserving the highest effective tariff rate in 100 years on 60 trading partners responsible for 99% of all imports.

To be clear, tariffs are taxes on food, vehicles, materials, parts, and energy imported from other countries. They are paid by the businesses bringing them into the country, who then pass on costs to consumers through higher prices.

The Midwest is particularly exposed to trade wars, with economies that are consumer-driven and responsible for one-fifth of American manufacturing and agricultural output. Illinois’ manufacturing sector, for example, adds as much to the U.S. economy as all the private and public sector activity in Idaho. Consumer spending accounts for two-thirds of our state’s economy.

New research from the Midwest Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois finds that Midwest families, manufacturers, and farmers have been paying the bill.

Specifically, we found Midwest households have been paying an average of $2,000 more due to the tariffs enacted by the Trump Administration in 2025. That’s 55% more than the rest of the country, which has seen average household costs grow by $1,300.

Examining six Midwest states, the study concluded that Michigan and Indiana have been most negatively affected. Average household costs grew by $3,200 in Michigan and $2,600 in Indiana. Businesses raised prices, halted hiring, or scaled back expansion plans. After years of manufacturing job gains between 2021 and 2024, manufacturers shed over 12,000 jobs in Michigan, 9,000 in Indiana, and 41,000 across the six-state Midwest region because of tariffs.

New import taxes were sold as a way to revitalize the manufacturing sector. The data says they have had the opposite effect, while also inviting foreign retaliation on U.S. exports like soybeans that limited farmers’ access to global markets. This hit Midwest states hard, especially Iowa.

In Illinois, the recent MEPI/PMCR study shows that tariffs imposed under the second Trump administration have increased household costs by an average of $2,200, shrunk manufacturing employment by 7,500 jobs, and caused a $5 billion loss to the state’s economy.

And the burden has not fallen evenly. Working families spend more of their budgets on categories most affected by import taxes, such as groceries, clothing, and automobiles. The result is that low-income households in Illinois exhausted 5% of their earnings on new tariff costs, three times more than high-income individuals.

It didn’t have to be this way. Tariffs can be useful tools if they protect American workers from unfair competition by low-wage countries with no labor, environmental, or safety standards. But on-again, off-again blanket tariffs have caused uncertainty for businesses and higher prices for everyone else.

And while the administration has now chosen to double down, the good news is that neither Congress nor the State of Illinois is without power to pursue a course correction.

Congress could reassert its constitutional authority over trade, cut import taxes, and return unconstitutional tariffs directly to taxpayers through refund checks. In the absence of federal action, Illinois can support workers displaced by the trade war by strengthening workforce transition funds that connect them with retraining, apprenticeship, and employment opportunities.

Across-the-board tariffs have not brought manufacturing roaring back to Illinois or to the rest of the Midwest. Instead, economic evidence shows tariffs have raised costs for families, eliminated blue-collar jobs, distressed farmers and hurt our economies.

And while the Trump administration is betting that more of the same will somehow yield different results, our elected representatives do have power to stand up for the families and businesses caught in the crossfire of this trade war.

The question is whether they have the will to act.

• Frank Manzo IV, MPP, is an economist at the nonpartisan Illinois Economic Policy Institute and Midwest Economic Policy Institute.