A new analysis suggests that former President Donald Trump’s proposed tariffs could significantly reduce disposable income for millions of Americans, with lower-income households bearing the brunt of the economic strain.
The Yale Budget Lab study, cited in an Axios report, highlights how these tariffs could disproportionately impact working-class Americans, contradicting Trump’s campaign promises of economic relief.
If Trump enacts a 20 per cent across-the-board tariff, and other countries retaliate with their own trade restrictions, the lowest-income households could see their disposable income shrink by up to 5.5 per cent. These Americans, already struggling with inflation and rising living costs, would face even greater financial hardship due to higher prices on essential goods.
Middle-income families aren’t spared either. The study estimates that an average middle-class household could see an additional $3,800 in yearly expenses due to price hikes caused by tariffs. While this group may not face as severe an impact as lower-income individuals, their increased financial burden could lead to reduced savings and spending, ultimately slowing down economic growth.
Although wealthier households would see a smaller proportional hit, they would still experience economic pain in pure dollar terms. High-income families could pay an estimated $9,500 more per year due to increased costs.
While they may be able to absorb these expenses better than lower-income groups, tariffs could still affect their investment portfolios. As inflation rises and consumer demand weakens, stock market values, bond yields, and real estate prices could decline—ultimately hurting those with significant assets.
Despite growing concerns, Trump’s economic advisers argue that tariffs are only one piece of his broader economic strategy. A White House official claimed that deregulation and government spending cuts would help balance out the impact of tariffs, keeping inflation under control while strengthening domestic industries.
However, many economists remain skeptical. Trump campaigned on promises of lowering prices, but inflation has remained a persistent issue. Experts worry that imposing tariffs could backfire, making everyday goods more expensive and reducing overall economic activity.
While tariffs are often framed as a tool to boost domestic manufacturing and protect American jobs, the reality is more complex. The study suggests that the hardest-hit groups will be low-income Americans, who already struggle with basic costs. Ironically, many of these individuals are part of Trump’s voter base, making the political and economic implications of the policy even more significant.
As the 2024 election cycle continues, Trump’s proposed tariffs are likely to be a key debate point. Will they protect American workers, as he claims, or will they further strain household budgets? Only time will tell, but early analysis suggests that millions could face severe financial setbacks if these policies are implemented.
