President Trump’s tariff war could push prices 1.8 percent higher in the short term, potentially costing the average American household about $2,400, according to a new analysis from The Budget Lab at Yale.
The nonpartisan think tank found that consumers faced an overall effective tariff rate of 18.6 percent, the highest in nearly a century. Adjusting for changes in consumer preference due to the tariffs, the Budget Lab estimated that the overall effective tariff rate would be 17.7 percent, still the highest since 1934.
The Budget Lab’s price analyses assume that the cost of the duties will be entirely passed onto consumers, and do not take into account any reaction the Federal Reserve could have to tariffs.
The new tariffs include a 50 percent levy on India. Laos, Switzerland and Iraq are also facing blanket tariff rates of 35 percent or higher.
The Budget Lab projected that low-income households would feel the costs of the tariffs more than their high-income counterparts.
In the short run, the tariffs will primarily impact leather products like shoes and bags, textiles and other clothing items, the lab estimated. In the long run, automobile prices could rise nearly 10 percent, the equivalent of about $4,500 added onto the price tag of a new car in 2024.
Groceries could be impacted to a lesser extent. The Budget Lab projected that food prices would rise 3.2 percent in the short term before stabilizing at 2.9 percent higher in the long run.
Most of Trump’s new tariffs went into effect Thursday.
