U.S. tariff hikes are reducing household purchasing power and will push hundreds of thousands more Americans into poverty, according to the Budget Lab at Yale University, News.az reports citing Xinhua.
A report released by the lab this week estimated that the new 2025 tariffs will increase the number of Americans living under the poverty line by between 650,000 and 875,000 -- roughly 0.2 to 0.3 percent of the U.S. population -- depending on the poverty measure used.
There are two major measures of poverty in the United States produced by the Census Bureau. The first is the Official Poverty Measure, a long-running measure of poverty that compares cash income to an inflation-indexed threshold. The other is the Supplemental Poverty Measure, a more comprehensive measure that takes into account more information on household resources and the cost of living.
Like other indirect taxes, tariffs raise prices in the economy or suppress nominal incomes, eroding what economists call "real" household income. Because families spend differently depending on income levels, the burden is unevenly distributed, said the report.
Because poverty is calculated by comparing household incomes to an inflation-indexed threshold, higher prices resulting from tariffs push that threshold upward without lifting most forms of income. As a result, more families are classified as poor, it said.
The findings suggest that tariff-driven price hikes are not only weighing on consumers but also worsening poverty, compounding the uneven economic toll of trade policy.
Researchers at the lab estimate the average tax rate on imports has jumped to more than 18 percent, the highest since 1933.
