3 Ways Trump’s Tariffs Could Impact The Bottom and Top 20%
Written by
Kerra Bolton
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Amen Oyiboke
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President Donald Trump’s evolving tariff policy has already reshaped the economy, and it’s hitting Americans at opposite ends of the income spectrum in different ways.
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For low-income households, the tariffs increase economic instability as inflation and job uncertainty rise. Wealthier Americans may not feel the immediate sting of higher prices, but their financial exposure runs deep as tariffs disrupt investments, corporate profits, and international trade.
Here are three ways Trump’s tariff policies could impact the bottom and top 20% of earners and what these trends could mean going forward.
Everyday Items Are More Expensive
Companies facing higher import costs often pass them down the supply chain, leaving consumers to pick up the tab.
“Tariffs during Trump’s presidency have had a big impact on companies, but they will hit American families with less money the hardest,” said Jeep Kline, managing partner and founder of Raisewell Ventures. “But they might take a little while to fully feel the impacts.”
Kline explained, “Due to inflation, these families already pay more for things they need every day like food at the grocery store and gas for their cars. Electronics and other items have also seen a spike in price.”
In addition, according to a trade analysis by the Federal Reserve Bank of Minneapolis, tariffs are likely to hit low-income families the hardest because they erase any gains they normally see from lower-cost imports.
“These households spend a larger portion of their income on goods, especially imported consumer goods, which will become more expensive,” said Chris Knupfer, portfolio manager at Financial Investment Team. “As prices rise, their already-limited disposable income gets squeezed further.”
Knupfer explained, “In contrast, higher-income households may feel the effects more through asset depreciation, such as volatility in investment accounts, rather than through meaningful changes in their day-to-day consumption.”
Jobs on the Line
Tariffs can cost people their jobs. However, not everyone faces the same level of risk.
Layoffs and reduced hours are direct threats to low-income workers in retail, manufacturing, and logistics.
“In the short- to medium-term, these tariffs are likely to drive inflation significantly higher and cause significant disruption to the global supply chain, threatening many U.S. jobs at manufacturers, wholesalers, and retailers who rely on the global supply chain to source the components, raw materials, and finished products they sell,” said Ben Johnston, COO of Kapitus, a small business lender.
Meanwhile, higher earners may feel the impact through shaken investor confidence, corporate restructuring, or shrinking bonuses tied to company performance.
“Investors are already pricing in these challenges, which is leading to a revaluation of equities in sectors most affected by tariffs,” Knupfer said.
The Shocks Hit Harder
President Trump’s abrupt reversal of the trade tariffs he imposed on dozens of countries less than a day before in favor of a 90-day pause destabilized businesses and confused investors and trading partners.
For example, the Associated Press reported that carmaker Stellantis and steel producer Cleveland Cliffs laid off 900 and 1,200 workers, respectively, due to Trump’s tariffs.
Jason DeLorenzo, owner and principal at Ad Deum Funds, said tariffs would “turn the whole economy on its head.”
“Low-income families will feel the pinch the most,” DeLorenzo said. “I would expect unemployment to increase and inflation to have a temporary lift but then turn to deflation which hurts the indebted low-income household.”
Citing reviews from his consumer advocacy website, Michael Podolsky said consumers are already feeling the pinch.
“Complaints suggest that consumers believe some retailers misrepresented or inflated the pricing of specific items due to tariffs,” Podolsky said. “At the same time, some consumers support the new tariffs, particularly with goods from countries like China. These opinions are often fueled by frustration over late deliveries and the low quality of products they receive.”
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