Tariffs Will Cost Typical Household $3,800 A Year, Analysis Says

All of President Donald Trump’s tariffs announced so far this year will push up costs for a typical household by $3,800 per year, according to a new analysis. 

Trump’s ever-expanding trade wars, meant to restore American manufacturing, come with a steep and growing price tag for U.S. consumers. His “Liberation Day” tariffs announced Wednesday will cost a typical U.S. household $2,100 a year as merchants pass import taxes on to consumers, economists at the Yale Budget Lab estimated. When added to previously announced tariffs on cars, steel, aluminum, and products from Canada and Mexico, all of Trump’s tariff policies will cost $3,800 a year, the lab said.

The analysis highlights the financial pain the tariffs are likely to cause in pursuit of a long-term gain that some economists doubt will materialize.

“The ultimate outcome here, with such large and broad-based tariffs, is we can expect that many consumer products somewhere down the line will see increased prices,” said John Dove, a professor of economics at Troy University in Alabama.

The tariff-related cost increases will likely disproportionately hurt lower-income households, Dove said.

Lower-earning households tend to spend a higher proportion of income on goods, which are subject to tariffs, such as food, energy, and clothing, versus higher-income households that spend more on services, such as travel and recreation, which are not. Lower-income households will be forced to make tough choices with their money, James Knightley, chief international economist at ING, wrote in a commentary.

“Financially pressured households will be cutting back spending in some areas to afford higher prices of essentials,” Knightley wrote. “It will also likely mean rising consumer loan defaults in an environment where Philadelphia Fed data shows a record high 10.5% of credit card holdings are only able to afford the minimum payment on their monthly credit card bill.”

Dove said that avoiding tariffs by buying “Made in the USA” products is unlikely to be an effective countermeasure. Many products manufactured in America have parts or materials from overseas, so their prices will go up, too. Higher prices on foreign products will also give American manufacturers cover to raise their own prices.

“As a business, when your costs increase, you have to find a way to absorb that somehow,” Dove said. “And many times, what that means is higher consumer prices.”