The typical American household will spend an additional $2,100 annually on products as a result of the new tariffs imposed by President Donald Trump, a CNN report based on the Tax Foundation found.
The analysis predicts Trump’s tariff policy will lead to a $900 billion reduction in U.S. imports, with consumers either switching to domestic substitutes or skipping purchases of goods that become prohibitively expensive.
Highest Tariff Rate in Nearly a Century
Even with these changes in consumer trends, more expensive prices will be inevitable, with the typical U.S. import tax expected to rise dramatically from 2.5% in the past year to 19% by 2025—the highest in nearly a century since the Smoot-Hawley days of 1933.
Fitch Ratings has cautioned that this rate may rise even higher, driving the U.S. tariff rate to its highest point in more than a century. Consequently, after-tax incomes for U.S. households are expected to decline by 2.1% this year, Tax Foundation estimates.
Wealthier Americans Less Affected
Though the effect will be broad, the report indicates that richer Americans will see a lesser reduction in their disposable income than middle and poorer groups.
Economists Sound Alarm on Recession Risks
Most mainstream economists caution that the U.S. and world economies may slide into recession this year if Trump does not modify his trade policies.
But the Trump administration has brushed aside these fears, saying that similar projections were made in his first term, but inflation and economic recessions never happened.
Trump, in his first presidency, had levied tariffs on $380 billion of products. Today, his new proposal is aiming at more than $2.5 trillion of imports, and more tariffs are on the way in the near future.
