Tariff Anniversary: What Americans Are Paying Now

A year after President Trump’s Liberation Day tariff announcement on April 2, 2025, American households have a clearer picture of what the policy has actually cost them. Yale’s Budget Lab - a nonpartisan research center - released its annual tariff analysis on April 2, 2026. It estimates an average annual household loss of $648 under the baseline scenario, rising to $1,130 if Section 122 tariffs extend past July.

The figures use 2025 dollars to capture duties implemented through April 2, 2026, per the report. That analysis also pegs the U.S. effective tariff rate at 11.0% - the highest since 1943. On April 2, Trump marked the one-year anniversary by announcing a new round of tariffs on name-brand pharmaceuticals, some reaching 100%.

What Families Are Actually Paying More For

The price increases tied to tariffs are not evenly distributed across spending categories. Motor vehicles, clothing, and home furnishings have seen the steepest effects, according to the Yale Budget Lab’s input-output pricing model. Services - which represent the majority of what most households spend each month - face only indirect tariff pressure and see smaller increases. The practical implication is that families who spend heavily on physical goods feel the cost most acutely, while those whose budgets skew toward services absorb less of the impact.

That dynamic is compounded by income level. Tariffs function as a regressive tax, the Budget Lab found: lower-income households spend a larger share of income on goods than higher earners do, so they absorb a proportionally larger burden. Households in the bottom income decile face a cost burden roughly three times larger as a share of post-tax income than those in the top decile, according to the analysis. In dollar terms, bottom-decile households face an estimated annual loss of around $430 under the expiration scenario, while top-decile households face roughly $1,810 - a gap that reflects the difference in what each group buys, not what each can afford to lose.

How Much of the Cost Is Reaching Consumers

Tariffs are paid at the border by importers, who then decide how much of that cost to pass on to buyers. The Federal Reserve Bank of St. Louis found in earlier research that companies passed approximately 35% of tariff costs onto consumers in the first months of the policy. Goldman Sachs projected that passthrough could eventually reach 55%, according to CBS News reporting. A separate S&P Global analysis found that across more than 9,000 U.S. companies, roughly two-thirds of $1.2 trillion in total tariff costs incurred during 2025 were passed to consumers through higher prices.

The practical result, across a wide range of categories, is that prices have moved - moderately in some areas, more sharply in others - and businesses have generally signaled they cannot absorb the full cost indefinitely. Several companies introduced explicit “tariff surcharges” during the past year, making the transfer of cost visible to the consumer at the point of purchase.

The Broader Economic Picture

Beyond household budgets, the Yale Budget Lab projects the current tariff regime will leave U.S. real GDP persistently 0.10% to 0.16% smaller in the long run - the equivalent of approximately $27 billion annually in 2025 dollars. Manufacturing output is projected to expand modestly, but those gains are more than offset by contractions in construction, mining, and agriculture. Global trading partners absorb their own effects, with Canada, China, and Mexico facing the largest negative output impacts.

The Supreme Court ruled elements of the earlier tariff regime unconstitutional in a 6-3 decision in February 2026. Trump publicly contested the ruling and announced additional duties in the weeks that followed. Whether the Section 122 tariffs expire on schedule in July or are extended remains the central variable in how the household cost figures evolve through the second year of the policy.

What Consumers Can Expect Next

The near-term outlook for household costs depends largely on two decisions: whether the Section 122 tariffs lapse or continue, and how the ongoing Iran war - which has already driven energy prices sharply higher - interacts with tariff-driven cost pressure across goods categories. Both forces are pushing in the same direction for most household budgets. The Budget Lab’s analysis was released before the most recent pharmaceutical tariff announcement and does not yet capture those potential costs. Updated projections are expected as the policy landscape continues to shift.

References: State of U.S. Tariffs: April 2, 2026 | Tariffs are starting to bite consumers and businesses, economists say