Jun 4, 2019 - Economy

Low-income Americans could be most affected by new U.S.-Mexico tariffs

Trump himself.

Photo: Henry Nicholls - WPA Pool/Getty Images

Low-income and fixed-income Americans may bear the brunt of President Trump's newly announced tariffs on Mexican goods, AP reports.

The big picture: Trump announced last week that he plans to levy a 5% tax on Mexican imports, increasing that number up to 25% in the ensuing months if Mexico does not address the flow of immigrants at the southern border. As the cost of everyday goods rises, low- and fixed-income households are expected to take the biggest hit. Meanwhile, more well-off households may be unaffected by the incremental increase in costs.

  • Lower-income individuals would be hard hit because:
    • This demographic generally spends the majority (if not entirety) of their incomes, while wealthier Americans are able to save or invest their money.
    • Wealthier Americans are apt to spend on comforts that will not be tariffed. Those living closer to the poverty line spend a greater portion of their incomes on staples, including groceries and clothing — items that are often imported and therefore subject to tariffs.
  • Despite the potential consequences, White House acting chief of staff Mick Mulvaney said Trump is "deadly serious" about the tariffs.

What's next: At a press conference with Prime Minister Theresa May on Tuesday morning, Trump said he expects the tariffs to take effect next week.

Go deeper: How Trump's Mexican tariffs would impact goods in America

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