“When Tariffs Hit Harder at the Bottom” (part 3)

If we’re going to understand tariffs—especially who really feels the pinch—we need to think about who actually bears the impact when prices go up. And that tends to be people with less.

Tariffs raise the prices of everyday goods—and not accidentally. Many basics like clothing, food, and household supplies are imported or rely on imported components. When those prices go up, lower-income households feel it most, because they spend a higher percentage of their income on these necessities. Studies have found that tariffs act like a regressive tax, where families at the bottom of the income ladder lose a bigger share of their disposable income than those at the top  .

Here’s what that looks like in numbers: according to the Yale Budget Lab, households in the second income decile saw losses amounting to –4% of their income under the April 2 policy, compared to –1.6% for the top decile. In dollar terms, that’s roughly $1,700 annual loss for lower-income families, while the top decile faces around $8,100—but that still represents a smaller slice of their overall income  .

And yes, in absolute dollars some higher-income households lose more. But the key is that as a proportion of income, lower-income families get hit the hardest. That’s how regressive taxation works—a flat rate on consumption ends up heavier on those who spend most of what they earn  .

In rare cases, foreign exporters might lower their prices in response to tariffs—trying to keep U.S. buyers interested. That might mean they absorb some burden themselves. But economists find these cases are the exception, not the rule. Most evidence shows near-complete pass-through: U.S. consumers or businesses pay it—in full or even more than the tariff itself in some cases  .

There’s another layer too: when U.S. companies rely on imported inputs to make goods, tariffs raise production costs, which means even “Made in USA” items can see price hikes. Some downstream industries struggle, see slower growth, or even pass the pain onto workers or investors—so the burden spreads  .

Geographically, certain parts of the country feel the effects more sharply. Regions with a high share of low-income residents (like parts of Appalachia and the South), or those with seniors on fixed incomes, are especially vulnerable to price shocks on essentials like food and clothing—goods now facing tariff inflation  .

That’s why saying “tariffs impact everyone equally” misses the point. In practice, they function more like an indirect tax on consumption, one that takes a bigger bite relative to resources from people who have less to begin with  .

So yes, tariffs may be intended to protect industries or raise revenue. But if we’re not careful, they end up reinforcing existing inequalities: wealth cushions the blow, while lack of it means far less room to absorb price hikes. That’s the part of the story that often goes missing—not because it’s invisible, but because we’re not always looking.