Special Poll
A new analysis from the Yale Budget Lab warns that President Trump’s potential plan to impose a 20 percent tariff on all imports could cost the average U.S. household over $3,000 a year, with the heaviest burden falling on low- and middle-income families.
According to the report, the proposed across-the-board tariff, if implemented alongside existing levies, would push the average U.S. tariff rate to its highest level since 1872. The result, researchers say, would be a noticeable jump in consumer prices and a hit to purchasing power nationwide.
Here’s what the analysis found:
- Prices would rise between 2.1% and 2.6%, depending on how other countries retaliate and how the Federal Reserve responds.
- That would translate to a loss of purchasing power between $3,400 and $4,200 per household, in today’s dollars.
- The plan could reduce U.S. economic growth, with real GDP growth projected to drop by 0.9 to 1.0 percentage points in 2025 if the full tariff takes effect.
- Over time, the U.S. economy could become 0.3% to 0.6% smaller, amounting to a long-term hit of $90 billion to $180 billion annually, depending on various factors.
- The report also predicts that while global GDP would suffer slightly, China’s economy would remain largely unaffected in the long run.
Trump is expected to announce a major new trade policy package on Wednesday, which could involve either a flat 20% tariff on all imports, targeted tariffs on specific countries, or a customized structure depending on the source of the goods. Sources say the decision has not been finalized, but each option would carry serious economic consequences.
Among the most impacted areas:
- Food prices could rise across the board, including for crops, produce, and packaged goods.
- The cost of oil and gasoline would likely climb.
- New automobiles, especially those manufactured abroad or with a high percentage of foreign parts, would see significant price hikes.
Specifically, the analysis projects that for the average new car sold in 2024, consumers could expect to pay about $3,700 more due to the tariffs.
The findings arrive at a critical moment as Trump prepares to move forward with what he’s branded a necessary step to “reclaim American strength” in global trade. But economists and policy experts warn that the cost to American households could be severe, particularly if retaliatory tariffs are imposed by U.S. trade partners.
If implemented, these sweeping tariffs could not only fuel inflation but also strain household budgets at a time when many Americans are already grappling with rising costs and economic uncertainty. With the economy showing signs of slowing, the big question now is: Will Trump’s aggressive trade push help or hurt the very voters he claims to champion?