Study: Trump-era tariffs could push up to 875,000 Americans into poverty

A Yale research group says tariffs imposed under former President Donald Trump could push as many as 875,000 Americans into poverty by reducing household purchasing power, a burden the study says would fall most heavily on lower-income families.

The Budget Lab at Yale University estimated that, if the tariffs remain in place after pending litigation, the Official Poverty Measure would rise from 10.4% to 10.7%, translating to roughly 875,000 additional people living below the poverty line. Under the Supplemental Poverty Measure, which factors in government benefits and out-of-pocket costs such as child care and medical expenses, researchers projected another 650,000 people could be pushed into poverty in 2026, including about 150,000 children.

Yale researchers said tariffs act like a tax on imports and erode "real" incomes by raising prices or lowering effective income across the board. Because lower-income households spend a larger share of their budgets on tariff-affected essentials such as clothing, household goods and basic electronics, the group said even modest price increases can have an outsized effect on their standard of living.

The Budget Lab’s analysis also noted that the average effective tariff rate in the United States has risen to about 17.4% under the Trump administration — a level the researchers said is the highest since 1935. The report cautioned, however, that tariff rates are in flux as trade negotiations with several countries continue and court rulings could alter which levies remain in force.

The legal status of many of the tariffs is uncertain. The Supreme Court agreed this week to review a lower court decision that found the former administration exceeded its authority in imposing several tariff measures. The lower court ruling would, if upheld, eliminate about 71% of the tariffs at issue, the Budget Lab said; the Trump administration has asked the justices to expedite consideration and to reverse the ruling.

The Biden administration’s critics and supporters of the tariffs disputed the findings. White House spokesman Kush Desai called the Yale researchers "Biden economists running the Yale Budget Lab," and said they had been incorrect in prior assessments. "Economic forecasters made similar doom-and-gloom predictions during President Trump’s first term," Desai said, adding that the administration’s agenda then was followed by job and wage growth.

Outside economists and policy analysts offered a range of views on the broader economic effects of tariffs. Some said tariffs can increase costs for consumers and risk reaccelerating inflation, while others pointed out potential trade-offs if tariffs prompt domestic investment or wage gains that could offset price rises. The Labor Department reported mixed inflation signals in recent months: wholesale inflation eased unexpectedly in August while a consumer measure ticked up slightly.

The U.S. Census Bureau reported that nearly 36 million people were living in poverty as of the end of last year, with an overall poverty rate of about 10.6%. Yale’s use of both the Official Poverty Measure and the Supplemental Poverty Measure is intended to show how different metrics capture distinct aspects of economic well-being; the official measure primarily tracks pre-tax income, while the supplemental measure incorporates government supports and costs that affect household resources.

The Budget Lab’s projections rest on assumptions about how tariff-driven price changes would affect incomes and spending patterns across demographic groups. The researchers emphasized that the distributional effects of tariffs vary because household consumption of tariff-affected goods differs by income level.

Some financial advisers and analysts noted scenarios under which tariffs could yield domestic benefits. "There’s also a possibility that tariffs could spur domestic growth or wage gains, which could offset the study’s findings," Leanna Haakons, president and founder of Black Hawk Financial, told The Post. The Budget Lab’s report did not assume such offsetting gains in its core estimates.

As the Supreme Court prepares to consider the legal challenge, policymakers and economists said the immediate economic impact will depend on whether the court upholds the lower-court decision and on the course of ongoing trade negotiations. If the tariffs largely remain in place, the Yale analysis suggests a measurable near-term increase in poverty rates concentrated among lower-income households. If many levies are struck down or renegotiated, the projected effects would be substantially smaller.