Trump tariffs to hit low-income Americans harder than richest: Report

Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7%

By Jarrell Dillard

 

President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

 

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2 per cent more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7 per cent more. Middle-income families making between $55,100 and $94,100 would pay 5 per cent more of their earnings.  

 

Trump has imposed the steepest US duties in more than a century, including a 145 per cent tariff on many products from China, a 25 per cent rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10 per cent tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days. 

 

Economists have warned that costs from tariff increases would ultimately be passed on to US consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

 

Food prices could rise by 2.6 per cent in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64 per cent, the report showed. 

 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.