New tariffs introduced by Donald Trump are projected to cost American households more in lost income than the government expects to collect in revenue.
Households Face Heavier Burden
While the US government anticipates collecting $300 billion in tariff revenue this year, American households are set to lose an even greater sum due to higher prices on imported goods.
According to The Budget Lab at Yale, a non-partisan policy research center, tariffs levied so far in 2025 could lead to a 1.8 percent increase in prices. This translates to an average annual income loss of $2,367 for each US household.
With over 127 million households in the country, this adds up to a staggering total income loss of $302 billion for Americans this year. The Budget Lab’s calculations also suggest a potential drop in GDP growth and a rise in the unemployment rate by the end of 2025.
Government’s Tariff Hopes
Treasury Secretary Scott Bessent recently stated that the US had already collected around $100 billion in tariff income by mid-2025, projecting it could reach $300 billion by year-end. This revenue is intended to be “paid” by the countries targeted by the tariffs.
However, the anticipated gains for the US government might extend beyond this annual figure. The Budget Lab estimates that current tariffs could raise net government revenue by $2.2 trillion over the decade from 2026-2035, though this is slightly lower than other official projections.
The Tariff Rollout: Who’s Affected?
Starting August 1, new tariffs will apply to goods imported from 22 countries. This comes after a 90-day suspension period, which economists view as a strategic move to pressure trading partners into quicker negotiations and deeper concessions.
Interestingly, many of the countries facing these tariffs had relatively small trade surpluses with the US in 2024. For instance, nations like Laos, Myanmar, and Moldova, with modest trade figures, are being hit with substantial tariffs ranging from 25 to 40 percent.
Brazil, despite the US having a trade surplus with it, faces the highest tariff rate of 50 percent. This appears to be linked to non-trade reasons, with former President Trump criticizing Brazil’s treatment of his predecessor, Jair Bolsonaro.
Key US allies like South Korea and Japan are also among the targeted nations, both facing a 25 percent tariff. Their inclusion raises questions about how these measures might impact broader geopolitical alliances.
- New tariffs are projected to cost US households $302 billion in income loss due to higher prices.
- This household cost exceeds the $300 billion in tariff revenue the US government expects to collect.
- Many countries with small trade surpluses, as well as key allies, are among those facing new tariffs.
The full economic and geopolitical ripple effects of these tariff policies remain a subject of ongoing analysis.
