New Analysis Shows Trump’s Tariffs Could Shrink Disposable Income for Millions

President Trump’s proposed tariffs on imports could take a serious toll on low-income Americans, who are already struggling with rising prices, a new analysis from the Yale Budget Lab suggests. The study, which was cited in an Axios report, found that the financial strain of tariffs would not be shared equally, with lower-income households seeing the largest impact on their disposable income.

If Trump moves forward with a 20% across-the-board tariff and other countries retaliate with their own levies, the lowest-income households could see their disposable income shrink by up to 5.5%, according to the study. In contrast, the highest-income households would see a 2.1% decline.

The financial hit also extends to middle-class families

A typical middle-income household would pay around $3,800 more per year due to increased costs from tariffs.

Wealthier households, in pure dollar terms, would pay more—an estimated $9,500 per year—because they tend to spend more overall.

Tariffs will eventually affect the wealthy, too

While lower-income Americans would feel the most immediate pain, economists warn that tariffs could also hurt wealthier Americans in the long run. As prices rise and economic activity slows, the value of stocks, bonds, and real estate could decline, affecting those with significant investments.

Trump’s Economic Team Defends the Plan

A White House official reportedly pushed back against concerns, saying that tariffs are just one part of Trump’s broader economic agenda. They argue that other measures, such as deregulation and government spending cuts, would help control inflation and keep the economy strong.

However, Trump campaigned on promises of lowering prices, and recent inflation spikes have raised questions about whether his trade policies would achieve that goal.

The key takeaway? 

Trump’s tariff plan could deal a significant blow to lower-income Americans, who already feel squeezed by the cost of living. While wealthier households will also face economic consequences, the study suggests that the burden of tariffs will fall hardest on those who can least afford it, a lot of whom voted for Trump.