Tariffs Bring Move toward Regressive Taxation

Tariffs are generally considered a regressive form of taxation—that is, a tax burden that falls more heavily on lower-income individuals than on higher-income individuals, relative to their incomes. When tariffs are applied, the cost of goods subject to the tariffs typically increases—unless absorbed in full by the seller. Since lower-income households spend a larger proportion of their income on goods and services, they are consequently more affected by price increases than higher-income households. By comparison, the federal income tax, to date, has been structured as a progressive tax—the tax rate that taxpayers pay increases as their incomes rise. Learn more about the current federal income tax structure and how it compares with the rates in previous decades.

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  Reference this tracker, Executive Order 14257, whereby President Trump announced tariffs applying to approximately 60 countries (other than China), and Executive Order “Amendment to Reciprocal Tariffs and Updated Duties as Applied to Low-Value Imports from the People’s Republic of China,” applying a tariff rate of 84% or greater to China. Most tariffs were scheduled to become effective April 9 or sooner. The President called the tariffs reciprocal, aiming to match other countries' trade barriers. While many of the reciprocal tariffs were greater than 10%, by a Truth Social post on April 9, the President paused for 90 days all reciprocal tariffs (seemingly limiting them to 10%), except against China. This leaves countries time to negotiate the amount of the tariffs.

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