President Donald Trump’s recent tariff hikes are predicted to push nearly 875,000 more Americans into poverty in 2026, according to a new analysis from Yale’s The Budget Lab. Among those, about 375,000 will be children. The estimate is based on the Official Poverty Measure (pre-tax income), which currently pegs the U.S. poverty rate at around 10.4% before the tariff effects—and which would rise to about 10.7% with them.
Low-income households are expected to be the hardest hit. Since they spend a larger share of their earnings on basics, and because many of the goods whose prices jump due to tariffs are imported, these households face disproportionate burden. The report also models outcomes using the Supplemental Poverty Measure—which accounts for government assistance and essential expenses—and finds that tariffs could increase poverty by about 650,000 people under that metric, including 150,000 children, raising that supplemental rate from about 12.0% to 12.2%.
The context: tariffs under Trump have pushed the U.S. average effective tariff rate to about 17.4%, the highest since 1935. That means many goods, especially imported ones, are now more expensive. Families already “living paycheck to paycheck” will see reduced purchasing power. Even small price increases in everyday items can make big differences for those near the poverty line.
The administration’s response has acknowledged some of the criticism. White House representatives argue that earlier policies—including tax cuts, deregulation, and previous tariff regimes—have helped “working-class households prosper” and narrowed inequality. Meanwhile, there’s also commentary around recent wholesale inflation data showing some easing in certain areas; but economists warn those reliefs are fragile and may not offset the broader impact of tariffs on consumer prices.
As this unfolds, policymakers face tough trade-offs: seeking protection for domestic industries via tariffs vs. the real risk of worsening poverty. The findings raise questions about what kinds of compensatory policies might be needed—stronger safety nets, tax credits, price supports—to soften the blow for families. It also suggests that wartime-like inflation pressures may remain in the background even if headline inflation appears more stable.
Key Economic Outcomes
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U.S. effective tariff rate has climbed to 17.4%, the highest since 1935, raising import costs broadly.
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Tariffs are expected to reduce household purchasing power, especially for low-income families.
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Everyday goods will likely rise in price, putting upward pressure on inflation persistence.
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The report suggests GDP growth may soften if consumer spending contracts under higher price burdens.
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Policymakers face greater fiscal pressure to expand safety net programs or adjust trade strategies.
Key Social Outcomes
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Tariffs could add about 875,000 people to U.S. poverty in 2026 under the Official Poverty Measure, including 375,000 children.
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Under a broader measure (Supplemental Poverty Measure), poverty might increase by 650,000 people, with 150,000 children affected.
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Poverty rates may rise from 10.4% to ~10.7% (Official) and from 12.0% to 12.2% (Supplemental) due to tariffs.
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Low-income households will suffer disproportionately, because they spend more on essentials and on imported goods whose prices will likely rise.
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Families living paycheck-to-paycheck will feel the squeeze most acutely as tariffs erode purchasing power and raise costs for everyday items.
Publication Details & Source
- Publication Date: September 10, 2025
- Live Link: CNN – “Trump’s tariffs could push nearly 1 million Americans into poverty, report finds”
(Original: CNN Newsource via media aggregator)
