According to new government data, businesses are beginning to pass their higher costs through to consumers. This reverse in fortunes is a consequence of President Donald Trump’s far-reaching import tariffs. This trend is especially pronounced among lower-income households, who have faced the brunt of inflation in prices for essential goods.
In August, grocery prices rose 0.6%, largely due to big leaps in the price of coffee. At the same time, clothing prices jumped by 0.5% just from the prior month. These increases add to the worries of most Americans, particularly those living paycheck to paycheck without much discretionary income. For Yanique Clarke, a nursing student from Manhattan, that wasn’t enough. She cited increasing costs of meat, vegetables, and fruits, which have all increased dramatically in price.
Nancy Garcia, who works in the publishing and gifts industry, echoed Clarke’s sentiments while preparing for back-to-school shopping for her 13-year-old daughter. She remarked that prices are “very much higher compared to previous years,” highlighting the significant financial strain families are experiencing.
Yet the economic reality creates an extreme gulf between wealthier Americans and those who are unable to keep food on the table. As Ernie Tedeschi, director of economics at the Yale Budget Lab, explains, lower-income households are especially susceptible to tariffs. These households tend to allocate more of their budget towards imports, which have been significantly impacted by recent tariff policies.
“The type of imports that have disproportionately borne the burden of tariffs so far this year, such as imports from China, tend to be lower-priced goods,” Tedeschi explained. Families like Clarke and Garcia are already living on the financial edge. This reality escalates the pressure cooker of their experience even further.
Sylvia Sealy, a part-time nurse who describes herself as middle-income. As a consumer, she has very much felt the bite of rising prices across the board since these tariffs went into effect. Now, as she continues to shop in a grocery store more often than not, she’d feel pressure to shop around for the best deal. “Even the supermarket has gotten really expensive,” Garcia added, emphasizing the rising costs many are now facing.
Chris Kempczinski, the CEO of McDonald’s, recently lamented the widening economic chasm in the United States. It’s almost like a two-tiered economy, he said, explaining that even as more affluent Americans keep the consumer economy going, lower-income Americans are finding themselves unable to afford rising prices.
Aside from the tariffs, Tedeschi highlighted that the increase in food prices can be attributed to the Trump administration’s immigration policies. This intersection of tariffs and the immigration policy enacted by the Trump administration would contribute to worsening the burdens already placed on lower-income households.