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Trump tariffs to hit working class the hardest, costing an average family $3,800 a year
U.S. President Donald Trump holds up a chart showing new tariffs on Wednesday (2 April ’25) at the White House. PHOTO: CHIP SOMODEVILLA/GETTY IMAGES
Dr.G.R.Balakrishnan Apr 05 2025 Exim & Trade News

Trump tariffs to hit working class the hardest, costing an average family $3,800 a year

President Donald Trump has plunged the United States into a new phase of his trade war, and this time the economic casualties will be clear, immediate and, for many Americans, painful. The new levies, combined with other tariffs already implemented this year, will raise costs for the average American family by $3,800, according to a new report by the Yale Budget Lab.

The tariff hit won’t fall evenly across American households: The Budget Lab’s analysis shows the new policy is a textbook example of what’s known as a regressive tax. That is, the tariffs will eat up a larger share of the earnings of lower- and middle-income families than they will for wealthy households.

In the short run, households in the second-lowest income decile — families earning roughly between $30,000 and $60,000, according to the Census Bureau — will lose about 4% of their disposable income due to Trump’s 2025 tariffs. Meanwhile, the richest households in the top quintile — those earning $175,000 and above — will only lose 1.6% of their income, according to the Budget Lab’s analysis.

 

The disparity is clear: The lower a household’s income, the more burdensome these tariffs become. This is because lower-income families spend a larger portion of their earnings on essential goods like food, clothing and household items.

In absolute dollar terms, higher-income families will incur larger losses — estimated at approximately $8,100 annually for the top 10% of households, compared with $1,700 for those in the second-lowest quintile. However, when calculated as percentage of household income, the impact of these import taxes will fall disproportionately on lower-income families.

 

Consumers should expect to see apparel prices to rise by 17% due to Trump’s 2025 tariffs, while the prices of fresh produce will rise 4% and motor-vehicle prices will go up by 8.4%, the equivalent of an additional $4,000 for a new car.

These commodity-price increases underscore the broader economic ramifications of the current tariff policies, highlighting the potential strain on household budgets and consumer purchasing power in the United States.

The new taxes, if kept in place, are expected to raise a large amount of money for the U.S. Treasury at a time when budget deficits are at historic peacetime highs.

They are forecast to bring in an estimated $3.1 trillion over the next decade before accounting for the impact on economic growth. But because these new taxes are likely to slow down the economy, the budget lab expects the true total to be about $2.5 trillion over 10 years.