Mary Lovely and Kimberly Clausing with the Peterson Institute for International Economics (PIIE) recently released a new Election 2024 economic platform assessment looking at the distribution of tax increases and reductions under Trump’s most recent economic proposals on the campaign trail – a 20% import tariff.
We find that imposing a 20 percent across-the-board tariff combined with a 60 percent tariff on China would cost a typical US household in the middle of the income distribution more than $2,600 a year. That’s up from the $1,700 loss in after-tax income that would result from his earlier plan. …
High tariffs also imply a massive shifting of the tax burden from richer taxpayers toward lower-income Americans. Following the method of Clausing and Lovely (2024), this PIIE Chart shows the net effects on Americans, grouped by income level, of Trump’s proposed tax cuts and tariff increases. Here we examine an across-the-board tariff of 20 percent, leaving the China tariff proposal unchanged. Households in all quintiles lose net income from such high tariffs, but the losses are greatest for those at the bottom of the income distribution. The median household would expect to see its after-tax income fall by about 4.1 percent, more than $2,600, because of tariffs. Still, the top 1 percent would experience net gains in income because their losses from tariffs are more than offset by Trump’s proposed tax cuts.
