Tariffs are often presented as a bill paid by foreign companies. The reality is more complicated.
When the United States places a duty on an imported product, the tariff is collected from the American importer. That business must then decide whether to absorb the cost, charge its customers more or find another supplier.
The latest evidence from the Federal Aviation Administration shows how this process can affect even essential government infrastructure.
In September 2026, the FAA estimated that tariffs would add approximately $100 million to its programme for modernising the American air-traffic-control system. Much of the additional expense was associated with radar equipment.
The broader modernisation programme is valued at more than $12.5 billion and is intended to replace outdated technology used to manage American airspace. It includes radar systems, telecommunications networks and other equipment needed to improve reliability and safety.
Compared with the programme’s total budget, $100 million may appear limited. But the cost is still ultimately carried by American public finances rather than a foreign government.
It is a clear example of tariffs returning home.
Some European suppliers are responding by moving production to the United States. Spanish technology company Indra and American defence group RTX have been shifting elements of radar production to US facilities.
This outcome supports one of the administration’s main arguments: tariffs can encourage manufacturers to invest and produce inside the United States.
However, relocation is neither immediate nor free. Constructing facilities, transferring technology, training workers and reorganising suppliers can take years. During that transition, prices may rise and delivery schedules may become more difficult to maintain.
Not every product can be replaced domestically. Modern industrial systems contain thousands of specialised components, many of which are produced by a limited number of companies. A tariff does not automatically create an American alternative.
The same problem extends far beyond aviation.
US manufacturers import European machinery, pharmaceutical ingredients, chemicals, vehicle components, medical devices and precision equipment. Tariffs may protect an American competitor producing the finished product while simultaneously increasing costs for another American company that uses imported materials.
Consumers can also feel the effect. The Tax Foundation estimates that tariff measures introduced since 2025 will create an average burden of approximately $820 per US household in 2026.
That figure is an economic estimate rather than a direct bill sent to every family. The effect appears through higher prices, reduced product choice, weaker investment or lower business margins.
The organisation estimates that new tariff measures affect approximately 54 percent of US goods imports in 2026. It also calculates that the current applied tariff rate is 11.8 percent, although the effective rate is lower because of exemptions, changes in purchasing and other factors.
The administration argues that these costs should be compared with the long-term benefits of greater industrial independence. Tariffs can make domestic production more attractive, reduce reliance on potentially unreliable foreign suppliers and give Washington leverage in negotiations.
That argument is particularly powerful in strategic industries such as semiconductors, energy equipment, defence and critical minerals.
Yet the FAA case demonstrates why implementation matters. A tariff intended to strengthen national security can increase the cost of upgrading infrastructure that is itself essential to national security and public safety.
Europe faces its own consequences. The European Central Bank has warned that higher American tariffs and the strength of the euro are limiting euro-area exports. European manufacturers must choose between accepting lower profits, increasing prices or moving more production to the United States.
This could gradually change the geography of transatlantic industry. Instead of exporting a radar system from Europe, a company might manufacture it in America. Instead of serving the entire international market from one factory, a producer might build separate supply chains for the United States and the EU.
That duplication may improve resilience, but it also makes production more expensive.
The economic result of the tariff strategy will therefore not be measured only by customs revenue or the number of factories that open in America. It will also depend on the costs imposed on public projects, companies and consumers.
Tariffs can change corporate behaviour. They can encourage investment and protect certain industries. But they cannot make the underlying costs disappear.
The $100 million expected impact on air-traffic-control modernisation provides a useful warning. In a deeply connected economy, trade barriers rarely remain at the border. Eventually, part of the bill reaches the country that imposed them.
Sources: Reuters — FAA sees $100 million tariff impact, Tax Foundation — Trump tariffs and trade-war tracker, ECB economic projections