Tariff Increases Would Burden Working-Class Americans the Most

As the U.S. considers broad tariff increases under former President Donald Trump’s trade strategy, working-class Americans may bear the brunt of higher prices on everyday goods. While Trump campaigned on tax cuts for service workers, retirees, and those earning overtime pay, his latest trade proposals could instead raise their cost of living.

Tariffs function as a tax on imported goods, typically paid by importers, but the costs are passed on to consumers. A new analysis from the Conference Board estimates that Trump’s proposed tariffs would push inflation up by 0.6 percentage points over a year. While that’s not as extreme as the price spikes seen in 2022, it would still put additional strain on middle-income households.

Many of the products affected by tariffs—including clothing, food, and household goods—are essentials that people can’t simply cut from their budgets. As lower- and middle-income Americans allocate a larger portion of their income toward these necessities, they will feel these price increases more acutely than wealthier individuals.

A System Favoring the Wealthy?

The U.S. tariff system already tilts in favor of wealthier consumers. Lower-cost products often face significantly higher tariffs than luxury goods. For example, an imported acrylic sweater is subject to a 32% tariff, whereas a cashmere sweater faces only a 4% duty. Similarly, women’s polyester underwear is taxed at 15.6%, while silk underwear carries just a 2.1% tariff.

This discrepancy exists because U.S. companies that manufacture lower-cost products lobby for higher tariffs to shield themselves from cheaper foreign competition. Meanwhile, luxury brands face less pressure to keep prices low and therefore push for fewer trade restrictions.

The Ripple Effect of Tariffs

The impact of tariffs extends beyond just the taxed goods. When import prices rise, domestic producers often use it as an opportunity to increase their prices as well. For example, if Canadian whisky faces higher tariffs, U.S. liquor companies may follow suit and raise their own prices, citing “market conditions” rather than government policy.

Additionally, the theory that higher tariffs will bring manufacturing jobs back to the U.S. is complicated. Many industries rely on raw materials from overseas, and tariffs on these imports could make domestic production more expensive rather than more competitive. As a result, tariffs could end up reducing manufacturing jobs rather than increasing them.

Where Things Stand

While the U.S. recently struck a temporary deal to delay tariffs on imports from Canada and Mexico for 30 days, Trump’s reliance on tariffs as a negotiation tool suggests that trade barriers will remain a key feature of his economic policy. If broad tariff hikes go into effect, they are likely to hit working-class Americans the hardest—raising prices on essential goods while offering little guarantee of job growth.