The impact of tariffs is coming. Which households will Trump's new plan cost most?
Jessica Guynn and Bailey Schulz, USA TODAY
4 min read
President Donald Trump says his new tariffs will punish other countries for unfair trade practices.
"Our country and its taxpayers have been ripped off for more than 50 years, but it's not going to happen anymore," Trump said Wednesday at a Rose Garden ceremony.
But some economists predict Americans will feel the pain – at least in the short term – and low-income Americans most of all.
Even as the stock market and consumer sentiment fall, the Trump administration is moving forward with 10% tariffs on imports from all trading partners outside Canada and Mexico, set to go into effect Saturday, plus additional duties on about 60 countries starting April 9.
U.S. trading partners are expected to retaliate.
At least some of the cost of these new taxes will be passed on to consumers, with the lowest-earning households expected to be dealt the biggest blow, according to a Wednesday analysis from Yale Budget Lab.
Households with an average disposable income of roughly $43,000, among the lowest in the country, would see disposable income drop 2.3% from the tariffs announced Wednesday versus 0.9% for the highest-earning households with disposable incomes above $500,000.
When accounting for all 2025 tariffs, disposable income is expected to drop 4% for the lower-earning households compared with 1.6% for the highest-earning.
The products that would get more expensive for these households include food, clothing, energy, and electronics.
"A tariff is what we call a regressive tax because it pinches families at the bottom more than it does families at the top," said Ernie Tedeschi, director of economics at the Yale Budget Lab.
Lower-income households are more exposed to tariffs relative to their incomes because they spend a greater share of their income, Tedeschi said.
"If you tax consumption, then you’re burdening those families more," he said.
In dollar terms, higher-income households get hit harder by the tariffs announced Wednesday: An average of $4,600 per household per year for those in the top tenth and $1,700 for those in the middle. That $1,700 represents a larger share of the middle-income household's disposable income.
The impact of tariffs would escalate over time for wealthier households as prices on assets such as stocks, bonds, and real estate decline, the Yale Budget Lab analysis showed.
President Donald Trump holds an executive order about tariffs increase, flanked by U.S. Commerce Secretary Howard Lutnick, in the Oval Office of the White House in Washington, D.C., U.S., February 13, 2025.
With deregulation and government cutbacks, it has positioned the president’s tariff agenda as a growth engine propelling an American resurgence.
"These tariffs are going to give us growth like you haven't seen before," Trump said.
Peter Navarro, Trump’s senior counselor for trade and manufacturing, said Sunday that tariffs will bring in $6 trillion in revenue in the next decade.
"Fearmongering about President Trump’s America First economic agenda isn’t going to change the fact that industry leaders have already made trillions in investment commitments to make in America and that countries ranging from Vietnam to India to the UK have already begun to offer up trade concessions that would help level the playing field for American industries and workers," White House spokesman Kush Desai said in a statement to USA TODAY.
A drone view shows a truck crossing into the United States via the Zaragoza-Ysleta border bridge, as President Donald Trump is expected to announce tariffs on most goods imported to the United States, in Ciudad Juarez, Mexico, April 2, 2025.
Americans will adjust to Trump tariffs, economist says
The Budget Lab analysis showed the American economy will be smaller in the long run due to tariffs, but Tedeschi said Americans will adjust.
"We find new products that we can buy. Businesses change their supply chains, they move production. Life goes on, and we all make adjustments to our economic lives to accommodate tariffs," he said.
But in the meantime, any household that can’t put off a big-ticket purchase this year will feel the brunt of the tariffs, according to Tedeschi.
"Consumers have a little more time on durable goods, but we’re talking months, not years," he said.
Trump’s 25% increase on vehicles and parts produced outside the United States took effect Wednesday and is expected to significantly increase the prices of new vehicles.
Miranda Marsh, an engineer from San Diego, said she could have held off until summer but bought a new car in March to avoid price hikes and panic-buyers.
“I bought quickly once I found a dealer that had the model and trim I wanted on their lot. It was maybe 18 hours or so from finding the listing and asking 'Is this available?' to getting the keys," said Marsh, who picked a 2025 Mazda CX-50 hybrid for its safety ratings. "We actually beat someone to it. They were waiting to test drive it after us."
