Why some families pay more than others

Tariffs are expected to cost the average household anywhere from a few hundred dollars to perhaps more than $1,000 this year, according to various economic analyses.

But economists say households could end up paying more or less based on a variety of factors, including family size, geography and typical purchases.

Low-income people are also likely to feel the effects more acutely than wealthy people.

Customs duty is a tax levied on imported goods. These are typically paid by U.S. corporations that import foreign goods.

In a recent paper, the New York Fed found that U.S. businesses and consumers will bear “the majority” of the economic burden of tariffs imposed in 2025, or about 90%.

The extent to which companies pass some or all of these import taxes on to consumers through higher prices varies by company, economists said.

Under the current tariff system, the average household will pay an additional $570 in tariffs in 2026, according to a March 9 analysis by the Yale Budget Institute, a nonpartisan policy research center.

Shortly after, the Trump administration temporarily imposed a 10% universal tariff on imports from all countries, with a few exceptions. President Donald Trump announced he would increase those tariffs to 15%, but the change has not yet been officially announced.

Steel, aluminum, automobiles, copper, trucks, buses, wood products, and semiconductors are also taxed.

At the end of the day, the ultimate economic burden of tariffs on households “varies greatly,” said John Rico, associate director of policy analysis at the Yale Institute for Budget Studies.

Ricco said the biggest factor is the size of the household or family.

Rico said the average American household has about three people living in it.

However, larger households are likely to purchase more goods than smaller households, and therefore will generally be exposed to higher tariff costs than smaller households, he said.

Ricco said where consumers live is also important. For example, a 1% price increase in California would be much higher than in Kansas because of the relatively high cost of living in those states, he said.

“Depending on the type of product you consume, the cost burden could be higher or lower,” Rico says.

For example, economists say tariffs tend to affect goods more than services such as travel, entertainment and dining.

Of course, this does not mean that services will not be affected at all. Tariffs on agricultural products can affect a restaurant’s bottom line, leading to an increase in menu prices, for example. But economists say goods will be hit more directly.

Households whose consumption is skewed toward services and skewed towards goods will therefore be more vulnerable to the economic impact of tariffs, economists say.

It also largely depends on the categories of goods that households purchase.

For example, Rico said, households that buy electronics such as computers (which often contain exotic metals currently subject to tariffs), clothing and cars are likely to be exposed to relatively higher costs than other households that don’t buy these products.

Wealthier households tend to buy more than low-income households.

In other words, in monetary terms, higher income earners are more exposed to tariffs. According to the Yale Budget Institute, the average annual expenses for households in the bottom 10% and top 10% of incomes are about $315 and $1,325, respectively.

However, the story changes when costs are evaluated as a percentage of total household income.

That $315 equates to a 0.8% decrease in after-tax income for the bottom 10% of households, according to the Yale Budget Institute. However, $1,325 represents a loss of just 0.3% of after-tax income for the top 10%, less than half the burden of the lowest-income households.

This is why economists call tariffs “regressive” taxes. This is because tariffs impose a relatively large cost burden on low-income people.

Economists say that low-income households generally spend more of their income than higher-income households. High-income earners spend less of their income on necessities, and have more disposable income that can be used for savings and investments other than buying things.

Furthermore, economists say that people with low incomes tend to buy more goods and fewer services than people with higher incomes.

“Wealthy and poor households buy different products, different quality products, and from different stores,” Mary Labrie, a senior fellow at the Peterson Institute for International Economics, a nonpartisan economic policy think tank, said in an email. “Most importantly, poorer households spend a higher proportion of their income and therefore pay a higher proportion of their income in import taxes.”