Trump’s second term isn’t just making the rich richer. It’s making the poor poorer.
If Donald Trump had run for president in 2024 by promising to enrich the wealthy at the expense of working- and middle-class Americans, Kamala Harris might be in the Oval Office right now.
But that’s just what he’s done. One of the defining features of his second term has been a sharp widening of the economic divide, with higher-income households getting richer while lower-income Americans face stagnant wages and higher costs.
Economists describe this as a K-shaped economy, with one trend line rising while the other falls. While the divide predates Trump, many of the policies widening it bear his signature.
His second-term agenda has consistently tilted in the same direction: policies that raise costs for many working families while giving tax breaks and windfalls to those with significant assets.
Tariffs have made many goods more expensive, cuts to food assistance have hit lower-income households, the expiration of Affordable Care Act subsidies has raised insurance costs at an unfortunate time, and the Iran war has sent energy prices surging. Those policies have coincided with soaring stock and home prices, which have disproportionately enriched Americans who already owned those assets.
Trump’s signature economic policy has been his sweeping tariffs. Importers are passing some of those costs on to consumers, raising the cost of clothing, furniture and food, among other things. Higher-income households can often absorb those increases with little change to their lifestyles. Families living paycheck to paycheck can’t. For them, every higher grocery, clothing or appliance bill leaves less money for everything else.
The president’s major legislative achievement, a massive tax bill, eliminated food aid for some 3.5 million Americans and put new limits on aid for millions of others. That has already generated “a remarkable increase in food insecurity,” according to the New York Federal Reserve.
The Republican-led Congress also let health insurance subsidies expire last year, which raised the cost of policies acquired through the Affordable Care Act. Some 4 million people have since dropped coverage. Meanwhile, care costs more. The average annual out-of-pocket deductible jumped by more than $1,000 for people with an Affordable Care Act plan when the subsidies expired. Cutbacks in Medicaid that go into effect in 2027 — also part of last year’s tax bill — will leave even more people uninsured.
The war with Iran that Trump launched on Feb. 28 delivered another blow to households already struggling with higher prices. The sudden surge in energy costs pushed inflation from 2.4% to 4.2%, with gasoline prices rising by more than $1.50 per gallon. Inflation hits lower-income people harder because they spend a larger share of their income on necessities they have to buy, even as prices rise.
The war seems to be simmering down and gas prices are now falling, but Moody’s Analytics estimated the war has still cost the typical household $1,000 in higher costs for energy, food, travel and other expenses.
Last year, the Congressional Budget Office estimated the Trump tax law would leave the bottom 20% of earners worse off, mostly through cuts in food aid, known as SNAP, that would more than offset any gains from lower taxes. That pain is now showing up in the real economy. During Kroger’s first-quarter earnings call on June 18, CEO Gregory Foran said that “the customer is under pressure. High gas prices and reduced SNAP benefits are squeezing budgets.” The grocery giant has launched new discounts directed at customers who qualify for aid programs — or used to.
While lower-income households were taking these hits, the economic picture was much rosier for the wealthy.
Wealthy Americans were already doing exceptionally well. But Trump sweetened the deal for them with the tax bill he signed last year, which lowered the average federal income tax bill for the top 20% of earners by about $13,000 per year.
The stock market rally that has been underway since late 2023 has been a terrific boon for anybody lucky enough to have investments. Those gains have generated roughly $15 trillion in paper wealth for American households since Trump took office in 2025. That would be more than $115,000 per household if distributed evenly throughout the country.
Rising home values have added another $2 trillion or so in newfound paper wealth during Trump’s second term. Real estate gains also accrue disproportionately to older, wealthier Americans, especially those who own homes outright or were able to refinance their mortgages at the record-low interest rates of the early 2020s.
Rick Newman is founder of The Pinpoint Press, a newsletter on money and politics, and author of four books.
