The precise impact will depend on how long the tariffs stay in place and if other countries retaliate. The Tax Policy Center, a think tank, estimates the average household’s after-tax income will fall 1%, or $930, in 2026 because of the tariffs. Goldman Sachs economists estimate the tariffs on Canada and Mexico, if sustained, would raise consumer prices by up to 0.7%, and knock 0.4% off the level of economic output.
In theory, the direct cost to consumers of tariffs could be offset by further tax cuts. But tariffs will have other, less tangible costs such as forcing consumers to alter what they buy because of cost or availability. The Peterson Institute for International Economics estimates tariffs will leave the U.S. economy about 0.25% smaller next year and 0.1% in the long run.
