The domain effects of the new wave of radical tariffs of President Donald Trump announced this week will feel more by low -income Americans, which depend largely on the products of the countries most affected by Trump’s tariffs and have less income available to absorb higher prices.
Trump is placing some of his highest rates of goods that come from countries that make the Low cost products that border the shelves of the discount retailers. Vietnam, Sri Lanka and Cambodia products, for example, will have a rate of more than 40%, that is, now importers must pay 40% of the value of those goods to customs and border protection in the entry ports to take them to the country. China’s assets will have a total of more than 70% of additional rates.
While Trump campaigned in a lower price promise for Americans who fight, their tariffs are expected to increase the cost of everything, from children’s shoes to fresh products, according to economists and business executives. The total impact of the tariffs announced since Trump assumed the position could cost the average home $ 3,800 per year, according to the budget laboratory analysis at Yale University.
For lower income households, they could see a 4% reduction in their income after taxes, estimated the report, three times greater than the impact on higher income households. This is because these consumers spend more about their income on needs such as food, clothing and transport and are more likely to buy products imported from the countries most affected by rates.
“Tariffs are a regressive tax, they harm low -income families rather than the families of high income,” said Ernie Tedeschi, director of Economics of the Budget Laboratory, who served as chief economist of the Council of Economic Advisors of the White House during the Biden Administration. “Tariffs are essentially a consumption tax, they are an expense tax and low -income families spend a greater proportion of their income than higher -income families, so they are more exposed to tariffs.”
Trump rates established as it assumed the position could increase prices in general by 2.3%, which would be at the top of inflation of approximately 3% that the United States is already experiencing, according to the budget laboratory analysis. Among the areas that will be most affected, according to the estimate: Leather items, including shoes, will increase in the price by 18%, clothing (17%) and electrical equipment (10%). Consumers could also see higher edible invoices, and the price of rice is expected to increase 10% and fish prices, nuts and fresh products will increase by 4%.
Trump and the White House officials have minimized the impact that these price increases will have, arguing They are necessary to realize global trade to recover manufacturing jobs to the United States Secretary of the Treasury, Scott Besent, who made millions working on Wall Street, said he believes that Americans want more than low -cost goods.
“The American dream is not, ‘Let them eat flat screens,” Besent said last month in “Meet The Press” by NBC News.
“The American dream does not depend on cheap ornaments They get from China, “he said.” It is more than that, and we are focused on affordability, but they are mortgages, they are cars, they are real salary gains. “
However, Americans have proven to be sensitive to the increase in prices in recent years, after an increase in inflation caused a violent reaction of voters in the 2024 elections. According to the exit survey, 4 out of 10 voters said that the economy was their main problem, more than any other subject surveyed.
“I have to tell him, as former administration official Biden, never underestimating how the inflation of the groceries will get angry,” Tedeschi said.
Similar to inflation, the impact will be more acute by households with the lowest income. Households not only depend more on lower costs imported from countries such as Vietnam or China, but also have less space to breathe in their budgets to absorb higher costs.
“At the lower extreme, they need every dollar for the things they are doing, such as the walks and the food and bus refuge,” said Kimberly Clausing, a non -resident member of the Peterson Institute of International Economics. “If you have a family income of $ 100,000 and the rates cost you $ 2,000, you will feel bad about it, it is 2% of your income. But imagine that you have an income of $ 20,000 and the rates cost you $ 800, that is 4% of your income and that will feel much more harmful.”
These low -income homes could also be in a weaker position to resist an economic recession, that Wall Street banks and corporate executives say it has become more Probably as a result of tariffs. They warn that the highest costs for companies could make investments stop or remove, such as a new location or factory, and less consumer expense could lead to employment cuts.
“The highest people in income distribution can resist these storms without being hungry or being evicted, but many Americans live much more economically precarious lives,” Clausing said. “Then, one of the great ironies of this policy is that Trump’s populism was really destined to talk to those who are left behind, and his lives will be very worse, much worse.”
Retailers in the first line of tariffs say they are preparing to have to increase prices while anticipating the fall in the demand of buyers. On Thursday, after Trump’s announcement, the actions of the retailers fell with the price of the shares for discount retailers five below and Wayfair, which sells less cost furniture, more than 20%, while Target and Dollar Tree fell more than 10%.
“The first indications are that these tariffs will be very serious for retail trade,” said Blake Harden, Vice President of International Trade with the Association of Leaders of the Retail Industry.
For example, the rate of a baby shirt made in Vietnam will now be more than double, to 78%, according to Rila. Retailers also anticipate that consumers could be spending less in general, said Harden.
“The margins are not great in retail trade. To begin with, they are quite thin,” said Harden.
For the footwear made in China, where the vast majority of the lowest cost shoes are produced, the rate rate has gone from around 10% to more than 70%. When all the various tariffs and marked are taken into account, a shoe that would have been sold for $ 33 a year ago would now be sold for $ 51, said Matt Priest, president of the Footwear and Retail Distributors of America.
“These are only astronomical numbers with which our members have never had to deal with and they are much worse than we anticipate,” Priest said. “The industry is in shock. I have been talking on the phone almost all night due to repercussions on how this will affect US jobs, US consumers.”
Ultimately, the highest costs will make some retailers stop selling certain low -cost shoes because they cannot obtain profits, he said.
“I think there will be a series of products that are no longer worth it, because it is not profitable,” said Priest. “It will be very limiting to what is available to US consumers in the footwear space.”
