The Trump administration’s tariff regime could push hundreds of thousands of Americans to the brink of financial instability this year.
That’s according to new research from the Yale Budget Lab, which estimated that the effects of President Donald Trump’s tariff regime could lead to a direct increase in the number of Americans living in poverty: 0.2 percent to 0.3 percent of the nation’s population, or between 650,000 and 875,000 people.
According to the group, which has been closely tracking the progress and fiscal impacts of the trade agenda, tariffs “directly reduce the purchasing power of low-income households (either by decreasing nominal incomes or by increasing prices).”
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“Tariff increases affect poverty in a straightforward way: because poverty is measured by comparing household incomes to an inflation-indexed threshold, and because tariff-driven price hikes will increase that threshold but leave most forms of income unchanged, more families will fall below the poverty threshold,” they continued.
The group relied on two measurement tools produced by the U.S. Census Bureau to support its findings. The Official Poverty Measure (OPM) is a longstanding method for measuring poverty levels which compares cash income to an inflation-indexed threshold. Another is the Supplemental Poverty Measure (SPM), which pulls in more data about household resources and cost of living.
According to the OPM, the tariffs in place as of Sept. 3 will lead to about 875,000 more individuals (375,000 of them children) living in poverty—an increase in the OPM from 10.4 percent to 10.7 percent. The SPM follows an analogous trajectory, showing that about 650,000 people could find themselves living below the poverty line, including 150,000 kids—an increase of 12 percent to 12.2 percent.
Despite continued assertions from cabinet officials that tariffs aren’t playing a role in raising prices at retail, consumers are living in a different reality.
Consumer Price Index data released Thursday shows that overall retail inflation rose 2.9 percent from the year-ago period—the fastest ascent in seven months, with August marking the fourth straight month of increased inflation.
Digging into the data, retail footwear prices grew 1.4 percent year over year in August—a 30-year high, according to the Footwear Distributors and Retailers of America (FDRA). Women’s footwear MSRPs ballooned by 2.8 percent in August—the highest rate in 2.5 years—while children’s shoe prices grew 0.9 percent, the fastest rate of growth seen so far in 2025. Only men’s shoes saw some pricing relief, falling 0.2 percent.
“The latest inflation numbers show what families already know—shoes are getting more expensive,” said FDRA president and CEO Matt Priest, who has long decried “onerous tariffs” as a hindrance to the growth of the footwear industry and a punishing tax on consumers.
With nearly all (98 percent) shoes produced in foreign locales, tariffs have disproportionately stunted the shoe sector, the group said. In August, footwear imports saw duties jump by 108.7 percent year to a record $635.8 million—a fact that Priest believes portends future price hikes.
That’s bad news for shoppers already living on the edge financially. “Shoes aren’t a luxury—they’re a necessity,” he said. “Yet tariffs keep driving up costs and forcing families to pay more. If the administration is serious about lowering costs, the fastest way to deliver relief is to roll back tariffs on shoes and other everyday essentials.”
While shoppers are experiencing sticker shock, the Producer Price Index (PPI), which measures inflation at the production level, showed an unexpected decline of 0.1 percent in August after a surge in July, and falling short of economists’ projections that that prices would rise 0.4 percent.
The average price of goods grew 0.1 percent, while the cost of services declined 0.2 percent, the data, released Wednesday, showed. Year over year, producer prices have grown by 2.6 percent.
Drilling down further, however, shows that the core PPI (which doesn’t include food, energy, or trade services) rose 0.3 percent month over month. Prices for final demand goods, which might include American-made apparel and footwear, grew by 0.1 percent.
In light of the softer-than-expected PPI, some analysts believe that producers could still be eating the cost of the tariffs—given that they didn’t raise prices much in August, contrary to predictions—or, demand for manufacturing could be softening.
