Economists now have more than a years’ worth of data to pick over when it comes to the impact of Liberation Day tariffs. While some might argue the revenue tariffs have generated are a gamechanger for the economy, others point to cost for those paying them.

Mark Zandi, chief economist at Moody’s Analytics, is concerned about the health of U.S. consumers. He previously told Fortune that—with the exception of job losses—a significant portion of U.S. families are effectively living in a recession.

Tariffs haven’t helped their fortunes. In a note yesterday, Zandi said that the data are “definitive”: “The tariffs have done significant damage to the economy,” he wrote.

“Since that day, job growth has come to a standstill, with only the non-traded healthcare industry adding meaningfully to payrolls,” Zandi added. “Also, since that day, inflation has accelerated, with the consumer expenditure deflator increasing at a 3% year-over-year pace, up from 2.5% before the tariffs and well above the Federal Reserve’s target of 2%.”

Zandi’s take counters arguments from the likes of U.S. Treasury Secretary Scott Bessent, who believes tariffs are the “dog that didn’t bark,” and that supply-side shocks don’t cause inflation, only temporary price moves in narrow markets—which the Fed should be encouraged to look through.

“We disagree,” with that argument, Aditya Bhave, chief U.S. economist at Bank of America wrote in a note late last month. “Supply shocks are inflationary because they shift the aggregate supply curve upward. Consumers respond by spending less in real terms and/or saving less. Indeed, since Liberation Day, real consumer spending has slowed, the saving rate has declined and y/y headline PCE inflation has increased by more than 40 [basis points].”

Setting the consumer impact aside (albeit a major factor in the health of the U.S. economy), it’s hard to ignore the impact tariffs have had on the bottom line for the Treasury’s balance sheet. For the full calendar year of 2025, the U.S. Department of Homeland Security collected $287 billion in customs duties, taxes and fees, up 192% on the year prior. Roughly a third of that (some $97.5 billion) was collected in Q4 alone, an increase of 5.2% on the quarter prior and up 281% on the same period for Q4 in 2024.

These funds will prove particularly helpful, particularly for an administration that likes a large fiscal package—think the One Big Beautiful Bill—which tariffs can help offset without adding to national debt. As Wharton’s Professor Joao Gomes previously told Fortune, revenue generation through tariffs is “peculiar” but  “you can also not deny that [Trump and his administration] bring strange forms of revenue that do change the debt picture.”

How reliable those funds will prove to be remains to be seen. In February, the Supreme Court ruled that Liberation Day tariffs (and indeed duties imposed at other points under the second Trump administration) were unconstitutional on account of their legal basis: the International Emergency Economic Powers Act (IEEPA). The White House quickly changed gear, leaning on legislation such as the 1974 Trade Act to keep the duties in place.

However, the revenues collected under IEEPA will be passed to international trade courts for redistribution back to businesses. Bessent himself has said he suspects they will never see the light of day, telling the Economic Club of Dallas: “My sense is that could be dragged out for weeks, months, years, so … we’ll see what happens there … I got a feeling the American people won’t see it.” 

The Iran shock

Returning to consumers, there’s already a new supply shock emerging: Oil. Prices have spiked from the U.S. and Israel’s war with Iran.

“The trend lines don’t look good,” observed Zandi. “The higher energy and other commodity prices caused by the war threaten to do even more economic damage than the tariffs, further undermining growth and pushing inflation higher. The U.S. economy is resilient, but just how resilient is set to be tested.”

Many economists have yet to place a timeframe on when the Middle East conflict will truly begin to bite on growth. However, last week  Mohamed El-Erian, the former CEO of Pimco, said the globe will “avoid a recession, provided—and here’s the important thing—provided the straits are reopened in the next four to eight weeks. If they’re not reopened in the next four to eight weeks, it will look very different.”