Trump’s Tariff Gamble Could Backfire

US Tariff Donald Trump's tariffs could increase the number of people living in poverty in the US by about 1 million by 2026. Tariffs and the associated price hikes have the greatest impact on low-income families. Economists say tariffs are a tax on American families because tariffs are taxes on goods and services rather than income.

US President Donald Trump has been claiming that tariffs will increase revenue and benefit Americans. But according to an analysis by Yale University's Budget Lab, tariffs could push more Americans into poverty.

The analysis found that Trump's tariff hike could increase the number of Americans living in poverty by about 1 million by 2026. The study used the official poverty measure, which calculates poverty based on pre-tax income.

Increase in poverty
The US Census Bureau had reported that by the end of last year, 36 million people were living in poverty. The poverty rate fell by 0.4 percentage points to 10.6 percent as incomes rose in line with the cost of living.

The Budget Lab found that poverty will also increase when it analyzed a more comprehensive measure, the Supplemental Poverty Measure. The Supplemental Poverty Measure includes food, child care, medical and other expenses. According to this, the poverty rate will increase from 12 to 12.2% in 2026.

Low-income people buy more imported products
Economists say that tariffs and the associated price hikes have the greatest impact on low-income families. Less affluent families spend a greater share of their income on living expenses than high-income families, which means they are more sensitive to changes in prices. Low-income families often buy more imported products than high-income families, which means they will be most affected by tariff increases.

This is how Trump tariffs can be removed
Student researchers believe that most of the tariffs imposed by Trump are still legally in limbo. The US Supreme Court has agreed to hear arguments on Trump's global tariffs. This gives Trump hope that the judges will overturn the lower court's decision in which the tariffs imposed against the countries were canceled. If the Supreme Court declares these tariffs illegal, then most of the tariffs imposed in 2025 (71 percent) will be removed.

Tariffs are a tax on American families. Since tariffs are taxes on goods and services rather than income, they affect more people who spend more of their income on necessities.

Highest tariffs in a century

The increase in tariffs during Trump's tenure has been historic. Based on the tariffs imposed by Trump this year, the average effective tariff rate in the US has increased to 17.4 percent, which is the highest since 1935.