A new report from The Budget Lab at Yale says President Donald Trump’s tariff plans could push almost 1 million Americans into poverty by 2026.
It reveals that approximately of 875,000 additional individuals, 375,000 of whom are children, will be below the poverty line as a result of the tariffs causing imported goods to be costly. These increased expenditures are due to the imposition of higher tariffs on goods imported by such nations as China, India, and Brazil, and this has made commodities more expensive. The poor families will be the worst hit because they use most of their incomes on the basic needs such as food and clothes, which are now costly due to tariffs.
Impact on Low-Income Families
The study explains that tariffs work like a tax on American households and hurt those with lower incomes the most. Less affluent families tend to purchase more imported products, thus experiencing a greater impact of the prices. It can make the life of many individuals already living paycheck to paycheck even more difficult. According to the report, the U.S. poverty level may increase to 10.7% due to tariffs (upon the current poverty level of 10.4%). The wider poverty index that includes such expenditures as child care and medical expenses would increase to 12.2%.
Rising Poverty Rates and Economic Impact
The research warns that poverty rates could climb to 10.7%, up from 10.4%, undoing progress made in recent years. Using the broader Supplemental Poverty Measure, about 650,000 more Americans may fall into poverty. That would push the poverty rate from 12% to 12.2%, showing how tariffs can weigh heavily on struggling families.
Government Response and Debate
The Trump team says tariffs are good for protecting American jobs and cutting inequality. According to a spokesperson of the White House, the policies of Trump, such as tax cuts, tariffs, and deregulation, have benefited working-class Americans and will keep increasing the economy. Critics, however caution to the contrary that tariffs will cause things to become more expensive, the purchasing power to go down, and more individuals to fall into poverty, particularly those who are already poor.
Tariff Rates and Legal Challenges
Trump’s tariffs have pushed the average U.S. tariff rate to 17.4% in 2025, the highest since 1935. At the start of the year, the rate was only 2.5%. The Supreme Court is now looking at whether Trump had the legal right to raise tariffs under emergency powers. If the court rules against him, some tariffs may be cut, though others might stay.
Wider Economic Effects
Experts also warn that high tariffs may slow down the economy and increase job losses. With the rate now at 17.4%, a huge jump from 2.5% earlier this year, markets face more uncertainty. There are also fears of inflation and even a recession. Some economists say if tariffs last too long, the U.S. could face stagflation, when prices go up but growth stays weak, which would hurt families even more.