President Donald Trump’s evolving tariff policy has already reshaped the economy, and it’s hitting Americans at opposite ends of the income spectrum in different ways.
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For low-income households, the tariffs increase economic instability as inflation and job uncertainty rise. Wealthier Americans may not feel the immediate sting of higher prices, but their financial exposure runs deep as tariffs disrupt investments, corporate profits, and international trade.
Here are three ways Trump’s tariff policies could impact the bottom and top 20% of earners and what these trends could mean going forward.
Everyday Items Are More Expensive
Companies facing higher import costs often pass them down the supply chain, leaving consumers to pick up the tab.
“Tariffs during Trump’s presidency have had a big impact on companies, but they will hit American families with less money the hardest,” said Jeep Kline, managing partner and founder of Raisewell Ventures. “But they might take a little while to fully feel the impacts.”
Kline explained, “Due to inflation, these families already pay more for things they need every day like food at the grocery store and gas for their cars. Electronics and other items have also seen a spike in price.”
In addition, according to a trade analysis by the Federal Reserve Bank of Minneapolis, tariffs are likely to hit low-income families the hardest because they erase any gains they normally see from lower-cost imports.
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“These households spend a larger portion of their income on goods, especially imported consumer goods, which will become more expensive,” said Chris Knupfer, portfolio manager at Financial Investment Team. “As prices rise, their already-limited disposable income gets squeezed further.”
Knupfer explained, “In contrast, higher-income households may feel the effects more through asset depreciation, such as volatility in investment accounts, rather than through meaningful changes in their day-to-day consumption.”
Jobs on the Line
Tariffs can cost people their jobs. However, not everyone faces the same level of risk.
Layoffs and reduced hours are direct threats to low-income workers in retail, manufacturing, and logistics.
“In the short- to medium-term, these tariffs are likely to drive inflation significantly higher and cause significant disruption to the global supply chain, threatening many U.S. jobs at manufacturers, wholesalers, and retailers who rely on the global supply chain to source the components, raw materials, and finished products they sell,” said Ben Johnston, COO of Kapitus, a small business lender.