Tariff Impacts on Affordability, Low-Income Households, and Recession—BORDERLINE ECONOMICS 1/16/2026
In spite of the estimated 17% effective tariff rate, inflation and the Consumer Price Index stayed relatively in line by the end of 2025. Yet, the lack of price increase is not an absolute indicator that tariff costs will not be passed through, as they can be attributed to aggressive front-loading seen early into the year, price discrimination, and large firms’ absorption of tariff losses instead of raising prices. As tariffs remain in place in the coming year, consumers may see significant increases in the costs of their essential goods, which will lead to disproportionately worsened well-being among lower-income households.
