Trump’s trade plan could be a tax on the poor, study shows

If tariffs do go into place, they would likely place a heavier burden on poorer people, as the CEA study suggests. That’s in part because spending on tradable goods – the kind of products that would be taxed under a tariff, like food and apparel – make up a larger proportion of the overall spending of poorer households, as past economic research shows.

The new study looks at tariffs that are already in place in the United States, collecting more than $33 billion a year. For their analysis, the economists match tariffs collected by U.S. Customs and Border Patrol with 381 categories of goods that people report buying in surveys done by the Bureau of Labor Statistics. Their calculation looks just at final goods, not at the effect of higher tariffs on intermediate inputs.

According to the economists’ estimates, the poorest 10 percent to 20 percent of households in the U.S. currently pay roughly $95 a year in tariffs, while middle-income households pay $190 and the richest 10 percent pay more than $500…

If tariffs grew by 10 percentage points across the board, as Trump’s transition team has proposed, the lowest-earning fifth of Americans could pay roughly $300 more per year for household purchases, while middle-income Americans would pay roughly $600-700 more, the study estimates. That would be a substantial burden in the U.S., where the median household income before tax is just a little more than $50,000 a year.