President Trump’s tariffs could push nearly 1 million Americans into poverty, since import taxes weigh more heavily on lower-income households, according to a study published this week.
Yale’s Budget Lab estimated that Trump’s tariffs – if they remain in place after a Supreme Court ruling – will increase the number of Americans living in poverty by as much as 875,000.
Tariffs reduce the purchasing power, or “real” incomes, of households by raising prices or decreasing incomes across the board.
“Because patterns of spending differ across households, this burden is felt unevenly,” Yale’s Budget Lab said in its report.
Tariffs disproportionately slam low-income Americans, who already live paycheck to paycheck and can’t afford to lose out on more of their income.
“Because lower-income households spend a larger share of their budgets on tariff-affected essentials like clothing, household goods, and basic electronics, they feel a heavier squeeze from even modest price increases,” Leanna Haakons, president and founder of Black Hawk Financial, told The Post.
However, there’s also a possibility that tariffs could spur domestic growth or wage gains, which could offset the study’s findings, Haakons added.
Less affluent households also tend to buy more imported products, which are highly sensitive to tariffs, according to economists.
White House spokesman Kush Desai blasted the “Biden economists running the Yale Budget Lab,” saying they “didn’t get anything right when Biden was president, and they aren’t getting any right now, either.”
“Economic forecasters made similar doom-and-gloom predictions during President Trump’s first term, when the very same agenda that the Administration is pushing now of tariffs, tax cuts, deregulation, and energy abundance unleashed historic job, wage, and economic growth – as well as the first decline in wealth inequality in decades,” Desai told The Post.
Yale’s Budget Lab said the poverty rate would increase to 10.7% with Trump’s tariffs, up from 10.4%.
Its findings are based on the Official Poverty Measure, a metric that analyzes pre-tax income.
The Budget Lab found that poverty would also worsen when it analyzed the Supplemental Poverty Measure, which factors in government programs like food stamps and expenses like child care and medical costs.
Trump’s tariffs will force another 650,000 Americans into poverty in 2026 – including 150,000 children, according to its analysis of the supplemental poverty measure.
The poverty rate would rise from 12% to 12.2% under this same viewpoint.
Under Trump’s lead, the average effective tariff rate in the US has spiked to 17.4% – the highest since 1935, according to The Budget Lab.
However, it’s unclear whether these exact rates will stay in place, as talks with several nations are still ongoing and levies are in flux.
The Supreme Court on Tuesday also agreed to take up a lower court ruling that found Trump exceeded his authority by imposing the tariffs.
The Trump administration has asked the Supreme Court to quickly strike the ruling, which found several of the tariffs illegal.
If the Supreme Court upholds the ruling, it would ban the vast majority – about 71% – of Trump’s tariffs.
Economists have warned that Trump’s tariffs could reheat inflation, though it’s unclear how long that price impact might last.
While wholesale inflation unexpectedly fell in August, the consumer measure slightly heated up, according to Labor Department data released this week.
As of the end of last year, nearly 36 million people were living in poverty, according to the US Census Bureau.
The poverty rate dipped 0.4 percentage points to 10.6% as earnings largely kept up with living costs, the Census Bureau said.
