Your wallet may be affected by President-elect Trump's tariff plan.

• During his presidential campaign, Donald Trump suggested implementing broad new tariff policies that economists warn would increase inflation and harm the U.S. economy.
• According to the Tax Policy Center and Peterson Institute for International Economics, a typical U.S. household can expect to pay an additional $2,600 to $3,000 per year due to rising prices.

Americans' economic anxieties over higher prices were partly alleviated by President-elect Donald Trump's victory in Tuesday's presidential election.

An NBC News exit poll revealed that nearly half of all voters said they were worse off financially than they were four years ago, which is the highest level seen in any election since 2008.

Trump's economic policy, which includes new tariffs on imported goods, may worsen inflation, as predicted by economists.

If tariffs are implemented, they may increase prices for American consumers and negatively impact lower earners, according to economists.

According to estimates, a typical U.S. household would spend several thousand more dollars annually on clothing, furniture, appliances, and other goods.

"Mark Zandi, Moody's chief economist, stated that it is detrimental to consumers as it is a tax in the form of increased prices for imported goods."

"It's inflationary," he added.

Other economists, including him, predict that the proposed tariffs would result in job loss and slower economic growth on a net basis.

CNBC did not receive an immediate response from the Trump campaign regarding the effects of tariffs and their extent.

How Trump's tariff proposal might work

A tariff is a tax placed on imported goods.

For centuries, tariffs have been a government revenue source. However, their significance has decreased, particularly among affluent countries, as per Monica Morlacco, an international trade expert and economics professor at the University of Southern California.

According to the Brookings Institution, a think tank, the U.S. employs tariffs as a protectionist measure to safeguard specific industries from foreign competition.

The upcoming presidential election has led Americans to increase their spending.

In his first term, Trump imposed tariffs on various goods, including washing machines, solar panels, steel, aluminum, and Chinese products. The Biden administration maintained many of these tariffs.

Trump's campaign proposals are more comprehensive, according to economists.

The president-elect has proposed a 200% or higher tariff on vehicles from Mexico and threatened to impose a similar amount on John Deere if the company moves some production from the U.S. to Mexico.

"In my opinion, the most stunning word in the lexicon is 'tariff,'" Trump stated at the Chicago Economic Club in October. "It's my top pick. It requires a public relations agency."

How much tariffs cost consumers

The Tax Policy Center predicts that a 20% worldwide tariff and a 60% levy on Chinese goods would increase costs for the average U.S. household by $3,000 in 2025. Additionally, Trump's plan would decrease average after-tax incomes by approximately 3%, according to the tax think tank.

An average household cost of $600 would result from a 200% Mexico-vehicle tariff, according to TPC.

A National Retail Federation analysis published Monday estimates that American consumers lose between $46 billion to $78 billion annually in spending power on various items such as apparel, toys, furniture, household appliances, footwear, and travel goods.

"Mike Pugliese, senior economist at Wells Fargo Economics, stated that he is quite confident in saying that tariffs are a policy that increases prices, but the question lies in the extent of the increase."

Tariffs paid by U.S. companies importing goods are the reason for the additional costs, with the vast majority of it being passed on to American consumers, while only some of it is paid for by U.S. distributors and retailers or foreign producers, according to Zandi of Moody's.

In a recent earnings call, AutoZone's president and CEO, Philip Daniele, hinted at this trend.

In September, Daniele stated that if tariffs are imposed, the additional costs will be passed on to the consumer.

In 2022, the U.S. imported approximately $3.2 trillion of goods, according to Olivia Cross, a North America economist at Capital Economics. If a 10% across-the-board tariff were implemented, it would result in a roughly $320 billion tax on consumers, Cross stated.

Tariffs reduce economic growth and jobs

Cross said that the financial fallout would probably not be as significant as that.

Trump's plan may strengthen the U.S. dollar and exempt certain categories of goods or imports from certain countries, which would likely lessen the overall impact, Cross stated.

The Tax Policy Center estimates that a 20% universal tariff and 60% Chinese import tax would generate approximately $4.5 trillion in net new revenue for the federal government over a 10-year period.

Pugliese of Wells Fargo explained that the administration could redistribute tariff revenue to households through tax cuts in some form or another.

Trump has suggested different tax reductions during his campaign. Furthermore, the tax cuts implemented by Trump in 2017 will expire in the upcoming year, and economists predict that tariff revenue may be utilized to renew them if Congress approves such legislation.

According to an analysis by the Peterson Institute for International Economics, a typical U.S. household would still lose $2,600 a year from Trump's tariff plan, even after factoring in the 2017 tax cuts extension.

Other tariff "cross currents" would likely harm the U.S. economy, according to Zandi.

According to Zandi, while U.S. companies that gain financially from protectionist tariff policies may add jobs, the total economy is likely to lose jobs on a net basis.

If the U.S. imposes tariffs on certain countries, those countries may respond with tariffs on U.S. exports, negatively impacting the profits of domestic businesses that export goods, as Zandi stated.

The statement made by him was that a rise in the cost of imported goods may result in a decrease in consumer demand, negatively impacting business profits and potentially causing layoffs.

The Tax Foundation predicted that Trump's tariff plan would result in a loss of 684,000 full-time jobs and decrease the U.S. gross domestic product by at least 0.8%.

Capital Economics predicts that the Trump administration will implement tariffs and immigration restrictions in the second quarter of next year, which will decrease Gross Domestic Product growth by approximately 1% from the second half of 2025 to the first half of 2026 and increase inflation by 1 percentage point, according to a note released Tuesday night.