Tax & Spending Cuts Plus Tariffs Would Hike Expenses for Bottom 60% by $800 

The combined impact of the Trump Administration’s unilateral,  across-the-board tariffs and Congressional Republicans’  tax and service cuts, would altogether hike costs for most Americans, roughly  the lowest-income 60%,by an average of almost $800 in 2026, according to a new analysis by Americans for Tax Fairness (ATF). The combination of fiscal policies would transfer that money from the majority of American families to the nation’s richest households: the highest-income 1% (those with a minimum income of nearly $1 million) would get an average net boost of about $47,000, while the ultra-rich 0.1% of Americans are given a $280,000 handout in just the first year of the GOP’s fiscal plan.  

“Working families who believed Donald Trump and his fellow Republicans were looking out for their interests have been deeply betrayed,” said ATF executive director David Kass. “The GOP’s top-heavy tax cuts, cruel cuts to human-needs services, and scattershot tariffs all add up to higher costs for a big majority of the American people. The Republican fiscal agenda gives the upper middle class a few dollars a day, but saves the real payoff for the top 1% and those above. It’s time to reverse course on all these policies to avoid cost increases for workers and families.”

The ATF analysis begins with a Penn Wharton Budget Model study of the distributional effects of the tax-and-spending plan recently passed by the House of Representatives. It then adds the distributional impact of tariffs as determined by the Tax Policy Center (TPC) to a recent tariff income estimate from the Trump administration. 

For the bottom 60% of American households, whatever tax cuts they get under the Republican budget will be overwhelmed by higher costs caused by the Trump tariffs, the loss of Medicaid insurance coverage and/or the loss of SNAP benefits that lower grocery prices. The lowest-income 20%–people who make less than around $17,000 a year–would perversely experience the biggest hit to household finances, losing over a thousand dollars on average through higher prices and reduced social benefits. Families in the middle of the income scale–with income ranging from about $51,000 to $93,000–would on average lose about $300 from the collection of GOP policies.

Americans for Tax Fairness analysis of PennWharton and Tax Policy Center data

Conversely, the greater costs  high-income households will face because of tariffs would be more than cancelled out by their huge tax cuts. In addition to the $47,000 net gain among the top 1%, the top 5%–all with income above roughly $388,000–would come out over $10,000 ahead. Neither income group depends on Medicaid or SNAP so are not impacted by cuts to those programs.

The Senate is due to consider the House legislation in June, with some Senators calling for more cuts to Medicaid (though others are calling for fewer). Any further reductions in funding for Medicaid or cuts to other public services relied on by low- and moderate-income families would only increase the burden GOP fiscal policies would have on those households. 

NOTE ON TARIFF IMPACT: The Trump administration’s tariff policy is in constant flux, but TPC’s  determination of the percentage of tariff impact experienced by different income groups would presumably apply to any tariff regime. The administration has predicted that its tariffs, whatever shape they eventually take, will bring in between $300 billion and $600 billion a year. To be conservative in our estimate, the lower figure was used in conjunction with TPC’s distributional analysis to determine the policy’s economic impact on different income-level households. 

TPC’S distributional model is based on “tax units”: individual adults or couples who file tax returns or would file if their income were high enough. While there are around 180 million tax units versus 130 million households (because a household may contain more than one tax unit), we use the term “household” in this report to describe both units of measurement because the distributional impact should be roughly the same.