Why low-income households would pay more
The products that will 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: An average of $9,500 per household per year for those in the top tenth and $3,800 for those in the middle. That $3,800 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.
White House blames tariff 'fear mongering'
The Trump administration is betting any short-term pain will be worth it.
With deregulation and government cutbacks, it has positioned the president’s tariff agenda as a growth engine propelling an American resurgence.
Tariffs will "spur growth like you haven’t seen before,” Trump said last week.
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.
Americans will adjust to Trump tariffs, economist says
Tedeschi expects the American economy to be smaller in the long run due to tariffs, but 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.
Bracing for higher prices, some car buyers are moving up their purchases.
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.”
