Paying More and Buying Less: 2025 Tariffs and U.S. Household Spending

Hacıoğlu Hoke, Sinem and Leo Feler

No 21471, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper estimates the effects of the 2025 U.S. tariffs on household spending using transaction-level data linked to tariff exposure and a tariff sentiment survey. Comparing high versus low tariff-exposed categories, we find 15 to 20 percent price pass-through. At the mean increase in tariff exposure, prices rise by 1 to 2 percent while spending falls by roughly 4 percent. Survey evidence linking stated intentions to revealed behavior identifies a mechanism for the large spending response: reallocation toward essentials and trade-down within categories, concentrated among middle-income households with discretionary slack who express tariff concerns. Low-income households bear a disproportionate welfare burden through regressive pass-through.

Keywords: Tariffs; Pass through; Prices; Welfare; Uncertainty (search for similar items in EconPapers)
JEL-codes: D12 E31 F13 (search for similar items in EconPapers)
Date: 2026-05
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