Researchers at the Yale Budget Lab modeled the price-level effects of the tariffs in place as of early 2026. Under the scenarios where Section 122 tariffs expire as scheduled, prices rise about 0.5% on a post-substitution basis, translating to a $648 annual loss for the average household. If the tariffs are extended, the price impact climbs to 0.8% and the average household loss reaches $1,130. Other estimates that include additional product-specific tariffs put the upper bound closer to $1,500 per household per year.
The methodology accounts for consumers shifting spending away from the most-tariffed goods, which softens the blow somewhat but does not eliminate it. The figures are quoted in 2025 dollars and apply to all-in household consumption.
The pain is not spread evenly across the consumer basket. Three categories are bearing most of the increase. Motor vehicles are the most exposed because nearly all imported vehicles and a large share of imported auto parts face tariffs. New-car prices are running 4% to 7% higher than they would otherwise. Used cars, which lean on the same supply chain, are up indirectly.
Clothing and footwear are the second category. The vast majority of US apparel is imported, and tariff pass-through has lifted shelf prices noticeably in budget chains where margins are thinnest. The third is furniture and home goods. Imported wood, upholstery, and finished furniture are facing meaningful duties that retailers have struggled to fully absorb.
What has not seen the same lift is services. Health care, education, rent, professional services, and most experiences are domestically produced and largely insulated. That is one reason core CPI has continued to cool even as headline goods inflation has firmed.
Tariffs function like a sales tax on imported goods. Sales taxes are regressive because lower-income households spend a larger share of their income on consumption. The Yale researchers quantify the gap. Under the expiring-tariff scenario, the bottom decile of households loses about 1.1% of post-tax-and-transfer income to tariffs, while the top decile loses about 0.4%. If the most aggressive tariffs are extended, those figures rise to 1.9% and 0.6% respectively.
In dollar terms, the average annual household burden is about $430 for the bottom decile and $1,810 for the top decile under the expiring-tariff scenario, climbing to roughly $740 and $3,100 if tariffs are made permanent. The richer households pay more in absolute dollars but a much smaller share of their income.
Tariff policy is not something a household can opt out of, but spending choices can blunt the impact. Three moves help. First, lengthen the holding period on durable goods. If tariffs are pushing up new-car prices, getting another two or three years out of an existing vehicle is a far bigger savings than any rebate. Second, lean on US-made or service-heavy spending where possible. Domestic restaurant meals, education, fitness, and home services are mostly tariff-free. Third, watch for sales windows and tariff-free inventory. Retailers occasionally clear pre-tariff stock at meaningful discounts.
The Yale Budget Lab estimates the average household pays between $760 and $1,500 a year in tariff-driven price increases, depending on which policies remain in force.
Motor vehicles, clothing, and home furnishings absorb the biggest tariff-driven price increases. Imported electronics and appliances are also affected.
Yes. Lower-income households lose a larger share of their income to tariff-driven price increases because they spend a larger share of income on consumption goods.
Services such as health care, education, and rent are produced domestically. They are not directly subject to import duties, so their prices respond only indirectly to tariffs.
Tariffs add a small but persistent boost to goods inflation. They are one reason headline CPI has stayed above 2% even as core services inflation has continued to cool.
Some Section 122 tariffs are scheduled to expire later in 2026 unless extended. Extensions or new agreements would change the household cost picture meaningfully.