The bigger picture: why everything costs more

The 2022 Inflation Reduction Act paid manufacturers to build batteries, solar panels, EVs and their components in the United States, and paid utilities to build cheap new generation. By early 2025 it had drawn hundreds of billions of dollars of announced private investment, most of it in Republican-held districts in the South and Midwest.

The Big Beautiful Bill ended the consumer EV and home-energy credits early and cut off the wind and solar credits for projects not under construction by July 2026. It wound down the advanced manufacturing credit and added "foreign entity" rules that disqualify many of the projects that remain. It also clawed back more than $5 billion of unspent loan and grant money.

Four Republican senators warned in an April 2025 letter to their leadership that businesses would pull back, and they did. E2, which tracks announced projects, counted $34.8 billion and 38,000 jobs cancelled in 2025, three dollars cancelled for every dollar newly announced, and another $14 billion in the first quarter of 2026 alone. Fewer new power plants at a moment when data centers are driving up electricity demand is one reason the models on our energy page project higher bills.

The 2022 CHIPS and Science Act, passed with bipartisan votes, funded semiconductor factories and a national research network so that chips would be made here rather than in Taiwan. The factory grants have largely survived; the Government Accountability Office reports that about $31.7 billion has been awarded across 49 projects.

The research half did not. In August 2025 the Commerce Department cancelled the $7.4 billion award to the National Semiconductor Technology Center, and in total cancelled $7.8 billion of the $11 billion research appropriation, redirecting the remainder to other priorities. Commerce also rewrote awards to take a 9.9% equity stake in Intel and demanded equity from seven other chipmakers as a condition of funds that Congress had already appropriated as grants.

The Big Beautiful Bill itself raised the semiconductor investment credit from 25% to 35%, which the industry welcomed. For companies planning decade-long investments, though, the rules changed twice in a year.

The GAO's July 2026 review found that Congress rescinded $6.4 billion of unobligated Inflation Reduction Act money in the Big Beautiful Bill. Separately, in response to January 2025 executive orders, the EPA, Transportation, Interior and Commerce departments cancelled roughly 800 awards worth $17.8 billion, with thousands more under review.

Locally, that looks like the Transportation Department's September 2025 termination of already-approved trail, bike-lane and pedestrian-safety grants in Alabama, New Mexico, Connecticut and elsewhere, on the grounds that they were "hostile" to car capacity. The law itself cancelled the entire $2.4 billion Neighborhood Access and Equity program, which funded projects reconnecting communities split by highways.

Money that was awarded and then withdrawn is worse than money never offered. Cities had hired engineers and bought right-of-way on the strength of it, and had put up their own matching funds.

Tariffs are a tax on imports, and the evidence from 2025 and 2026 is that American businesses and consumers paid most of it. The Tax Foundation, a conservative tax think tank, puts the cost at about $1,000 per household in 2025 and $820 in 2026; Yale's Budget Lab and the Penn Wharton Budget Model land in the same range. The Federal Reserve chair told reporters in March 2026 that "between a half and three-quarters" of core inflation "is actually tariffs."

In February 2026 the Supreme Court ruled 6–3 that the emergency-powers law the administration had used did not authorize tariffs at all. The administration replaced them within days under other statutes, first a temporary 10% global tariff and then, from July 2026, tariffs of 10% to 12.5% on more than sixty trading partners covering nearly all imports. Refunds of the illegal tariffs are being litigated.

The Wall Street Journal editorial board, no opponent of the administration on most things, wrote in July 2026 that "U.S. companies, workers and consumers are picking up most of the tab." The Cato Institute's July 2026 study of tariff incidence reached the same conclusion.

On February 28, 2026 the United States and Israel began a bombing campaign against Iran. Iran retaliated across the Gulf and effectively closed the Strait of Hormuz, through which a fifth of the world's oil normally passes. There was a ceasefire in April and a signed memorandum in June, but the deal collapsed in July. Strikes resumed in September, including a "tanker war" in which U.S. forces hit Iranian tankers and Iran fired ballistic missiles at U.S. carriers. As of this writing the conflict is ongoing.

The Energy Information Administration recorded the largest oil-supply disruption in the market's history: flows through Hormuz fell from about 21.6 million barrels a day before the war to 4.9 million in the second quarter. Brent crude went from about $72 to nearly $120 in March and was back above $100 in September. At the pump, the national average rose a dollar in a month, peaked at $4.56 in May, and was $4.28 on September 10, 2026 against $3.19 a year before. Diesel, which moves every truckload of food and goods, was nearly $6.

That feeds straight into inflation. The July 2026 consumer price index showed energy up 14.7% and gasoline up 24.6% over the year. The Federal Reserve's July statement said inflation "remains elevated" in part because of "supply shocks that have driven price increases in certain sectors, including energy." Goldman Sachs estimated the war adds more than a point to headline inflation in 2026.

Republicans have said so too. Senator Rand Paul warned the war would keep "hitting American families even harder at the pump." Representative Marjorie Taylor Greene asked what happened to "drill baby drill, cheap gas, and no more foreign wars," and in September called diesel prices "the highest in history." An unnamed Republican senator told The Hill the gas-price effect was "a huge political problem." The Pentagon put the direct cost at $37.5 billion by July 21 and asked Congress for $67 billion more, on top of the deficits the Big Beautiful Bill already added.

Inflation had fallen to about 2.5% by early 2025. By mid-2026 it was back at 3.4%, with the Fed citing tariffs and the energy shock, and holding interest rates high in response. High rates are what keep mortgage and car-loan payments up, and the Big Beautiful Bill's $3.4 trillion in new borrowing pushes the same direction.

Electricity prices were already rising faster than inflation because of grid spending and data-center demand. Cancelling the cheapest new generation, and then adding a natural-gas price spike from the war, removes the two things that would have brought them down.

These were separate choices, and each raised prices a little. They were made within the same eighteen months, on top of a law that took the most from the households with the least room to absorb it.