The Trump administration’s latest round of tariffs is poised to push hundreds of thousands more Americans into poverty, according to new research from Yale’s Budget Lab. The analysis estimates that between 650,000 and 875,000 people — including as many as 375,000 children — could slip below the poverty line as a direct result of higher consumer costs tied to the trade measures.
Yale’s Budget Lab found that tariffs operate like an indirect tax, raising the cost of living while doing little to increase household incomes. In practice, this erodes purchasing power and hits lower-income families harder than wealthier ones. “Tariffs reduce households’ real incomes by raising prices, which effectively lowers spending capacity,” researchers wrote. Poverty, they explained, is determined by comparing household income to an inflation-adjusted threshold — and with tariffs driving consumer prices higher, more families are likely to fall short of that benchmark.
The study evaluated poverty through two key metrics. Under the Official Poverty Measure (OPM), which strictly compares cash income with an inflation-indexed threshold, the tariffs in place as of September 3, 2025, would push an additional 875,000 people into poverty, raising the national poverty rate from 10.4 percent to 10.7 percent. Of that total, about 375,000 would be children. Using the Supplemental Poverty Measure (SPM), which factors in a broader set of household resources and living costs, the effect would be slightly smaller — about 650,000 more people, including 150,000 children, raising the poverty rate from 12.0 percent to 12.2 percent.
Not all households will feel the impact equally. The top 10 percent of earners, those making $250,000 or more annually, account for nearly half of all consumer spending — up from 36 percent three decades ago. That concentration of spending power shields wealthier households from meaningful effects, even as price increases ripple through the broader economy. For lower-income households, however, higher living costs could force painful tradeoffs.
To arrive at its estimates, Yale’s Budget Lab relied on data from the Current Population Survey’s Annual Social and Economic Supplement, which provides household poverty data from 2023. Researchers projected income and demographic trends forward into 2026, accounting for inflation-indexed adjustments and expected economic growth. Absent new tariffs, the Lab anticipated that poverty would decline slightly over the next few years.
The consequences could extend far beyond household budgets. For commercial real estate, a rise in poverty means more tenants struggling to pay rent and, potentially, more landlords struggling to collect. Swelling economic strain also threatens local retailers and other businesses that depend on consumer spending. As Yale’s researchers noted, reduced purchasing power can cascade across markets, amplifying the economic toll in ways that affect both consumers and property owners.
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