Yale’s Budget Lab analysis reveals Trump’s tariffs act as a highly regressive tax, hitting America’s poorest households 3x harder than the richest. Tariffs reduce after-tax income for the bottom 10% by 2.45% compared to 0.77% for the top 10%. University of Michigan economist Justin Wolfers highlights the regressive nature of the tariffs.
The Budget Lab’s modeling shows the average lowest decile household faces a real income loss of $920, while the average top-decile household loses $3,871 due to increased effective tariff rates on goods like clothing and electronics. The overall average U.S. tariff rate has jumped to 16.8%, the highest since the 1930s.
Long-run estimates predict a 0.31% reduction in U.S. GDP and the loss of hundreds of billions in dynamic revenue due to Trump’s tariffs. Legal contingency scenarios suggest partial invalidation of tariffs under the IEEPA, but even then, the poorest households face a tax burden 2.7x higher than the richest.
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Overall, Trump’s tariffs disproportionately affect low-income households, imposing a higher tax burden compared to high-income households. The analysis raises concerns about the regressive nature of the tariffs and their impact on the economy.
Read more at Yahoo Finance: Top Economist Warns Trump Tariffs Effectively Impose Tax Rate On Low-Income Households That Is Triple Of High-Income Ones