"Tariffs aren't just bad for business and consumers: They will also increase the number of Americans living in poverty, according to new research. An analysis out this week from The Budget Lab at Yale University found the Trump administration's new 2025 tariff hikes will increase the number of Americans living in poverty by somewhere between 650,000 and 875,000 in 2026-that's 0.2% to 0.3% of the U.S. population-including some 150,000 to 375,000 children."
"You can think of tariffs as indirect taxes, which increase prices, thereby decreasing the purchasing power and income of American households. That's because tariff costs are often passed from businesses onto consumers. In fact, U.S. consumers absorbed 22% of tariff costs through June, and that number is expected to rise to 67% by October, according to an analysis from Goldman Sachs, CNN reported."
"When Americans lose purchasing power (meaning they are not able to buy as much with the same income), households with the lowest income feel the most burden, and more end up falling below the poverty threshold. Lower-income families often use a bigger chunk of their earnings on living expenses than wealthier ones, making them more vulnerable to price shifts, CNN noted."
Trump administration 2025 tariff hikes will increase the number of Americans living in poverty by 650,000 to 875,000 in 2026, equal to 0.2%–0.3% of the population, including 150,000–375,000 children. Tariffs act as indirect taxes that raise prices and reduce household purchasing power because businesses often pass tariff costs to consumers. U.S. consumers absorbed 22% of tariff costs through June and are expected to absorb 67% by October. The overall average effective tariff rate faced by consumers is estimated at 18.6%, the highest since 1933. Estimates rely on the Official Poverty Measure, Supplemental Poverty Measure, and U.S. Census Bureau data.
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