Trump’s Tariffs – A Stealth Sales Tax
Tariffs are essentially a stealth sales tax, and a form of regressive taxation as that surcharge lands hardest on households living paycheck-to-paycheck.
Because a tariff is paid by the importer at the border, it raises the wholesale cost of everyday items – clothes, appliances, even basic groceries.
Retailers can absorb a sliver of that hit, but most of it is passed through the supply chain. In turn, this shows up on the shelf as higher prices.
Low-income families feel the squeeze first because goods (rather than services) dominate their budgets. The poorest fifth of US households spend roughly half of every dollar on merchandise that’s often imported.
It’s like adding a tollbooth on every highway that delivers goods to Walmart: drivers (importers) pay the toll, but by the time the truck reaches the parking lot, the cost is baked into the price of everyday items low-income shoppers can’t simply stop buying or substitute away from.
Recent modeling by Yale’s Budget Lab finds that the 2025 tariff package lifts the overall price level 2.3 percent and costs bottom-quintile households about $1,700 a year – roughly a month’s worth of food for the median SNAP recipient.
Deloitte’s May analysis shows similar pass-through dynamics for autos: a 13.5 percent tariff would add about $6,400 to a new-car price tag, wiping out the entire annual federal Earned Income Tax Credit for a single parent with one child.
Even partial pass-through matters: Fed researchers find that the early-2025 tariffs boosted core-goods inflation by 0.3 percentage points within weeks.