Trump’s budget is one big “beautiful” regressive policy

Abstract

US President Donald Trump’s One Big Beautiful Bill Act (OBBBA), passed by the US Congress, is certainly big. Its beauty is more questionable. The act forms one part of Trump’s signature economic strategy, the other being tariffs. Yale University’s Budget Lab calculated the distributional effects of both the OBBBA and the tariffs implemented as of 1 June 2025. The figures show that, after taxes and transfers, the household income of the poorest 80% of households will go down. The poorer the household, the greater the reduction will be. The poorest 10th of households will lose 6.5% of their income; the richest 10th will gain 1.5%.1 The budget is regressive—tax cuts that favour rich people, service cuts that hurt poor people—but so, too, are the tariffs. Tariffs are a tax on imported goods, paid by the importer. Most economists conclude that those extra taxes will show up in the prices that customers have to pay. Consumption of everyday goods, affected by tariffs, makes up a larger percentage of household expenditure of poor households …