Shipping containers at the Port of Seattle on April 16th, 2025.
David Rider/Bloomberg via Getty Images
According to a new analysis, the tariffs collected by President Donald Trump in his second term will hurt poorer American households than the wealthiest in the short term.
Customs duties are taxes paid by importers on foreign goods. Economists expect consumers to bear the burden in the form of at least a higher price for their tax burden, depending on how the company passes the costs.
In 2026, if current customs policy is maintained, households’ poorest 20% taxes will rise roughly four times higher than the top 1% taxes. These were findings according to an analysis published on Wednesday by the Institute for Taxation and Economic Policy.
According to an analysis by ITEP, tariffs will impose a tax increase equivalent to 6.2% of income for households with incomes under $29,000 in 2026, which is equivalent to 6.2% of income for that year.
Meanwhile, ITEP found that the top 1% of people earning more than $915,000 a year will increase their taxes by 1.7% compared to their income on average.
Economists analyze the financial impact of policies on household income. Because it shows how their disposable income and quality of life are affected.
Taxes under “alias”
“Taxes are merely taxes on Americans under different names,” a researcher at the conservative think tank Heritage Foundation wrote in 2017 during Trump’s first term.
“[They] They added, “We will raise the prices of food and clothing, which make up a larger share of the budget for low-income households.
Meanwhile, there is already evidence that some retailers are increasing costs.
A recent analysis by the Yale Budget Lab found that Trump’s tariffs are “regressive” policies.
More details from personal finance:
As trade wars increase the likelihood of a recession, consumers are spending
Consumers will make financial changes in response to customs duties
Can customs income replace income tax?
The short-term tax burden on tariffs is about 2.5 times greater for bottom people, Yale analysis found. We investigated tariffs and retaliatory trade measures up to April 15th.
“Low-income consumers will be even more boring with tariffs,” said Ernie Tedesci, director of economics at the Yale Budget Institute during the Biden administration and former chief economist for White House economic advisor.
Treasury Secretary Scott Becent said tariffs could lead to “one-time price adjustments” for consumers. However, he also combined trade policy as part of the broader White House economic agenda, including a legislative package of tax cuts.
“We are also working on tax bills and believe that tax cuts will be significantly higher for working Americans,” Bescent said on April 2.
It is also unclear how the current customs policy will change. The White House signalled trade agreements with certain countries, with certain products exemptions potentially offshore.
Trump imposes a 10% tariff on imports from most US trading partners. Mexico and Canada face 25% collection on tranche goods, while many Chinese products face 145% import duties. Certain products also face tariffs, including the 25% obligations for aluminum, steel and automobiles.
