Tariffs imposed last year by the Trump Administration cost the average Hoosier household $2,600, according to a nonpartisan report.

“Tariffs and the Midwest: Impacts on Households, Manufacturing and Economies in Six States” also found that Indiana effectively lost almost 9,150 manufacturing jobs last year, a decrease researchers attributed to the effects of tariffs.

Overall, Indiana’s gross domestic product, or GDP, decreased by $3 billion in 2025 as a result, according to authors of the study released July 22.

Of the six states studied, Indiana trailed only Michigan for the largest tariff impacts. The additional cost paid by the average Michigan household was $3,200, and its number of manufacturing jobs effectively lost was 12,400. Both states have significant auto manufacturing operations.

The remaining four states were Illinois, Iowa, Minnesota and Wisconsin. The states were chosen because of their reliance on manufacturing and agriculture as a large part of their economies. Combined, they account for 19% of U.S. manufacturing output and 20% of U.S. agricultural production.

The research was conducted by Frank Manzo IV, an economist with the Midwest Economic Policy Institute, and Robert Bruno, director of the Project for Middle Class Renewal and a labor studies professor at the University of Illinois at Urbana-Champaign.

“It’s always a challenge connecting policies” to personal experience, Bruno said, explaining why it was important to reduce the tariffs’ national effects to the household level.

Heather Tierney, an economist, framed the tariffs’ effects in basic terms.

The associate professor of economics at Purdue University Fort Wayne said local shoppers who adhere to a budget realize they have fewer bags when they leave the grocery store.

“They can see, ‘Wait a minute, this is costing me more than it did last year,’ “ she said.

Global economy

Among the report’s findings was that effects on families varied considerably across income levels. The new tariffs accounted for up to 7% of earnings for low-income households but 2% or less for high-income households in the six-state region, the study said.

Manzo noted that families living paycheck-to-paycheck aren’t spending their income on luxuries. Instead, they buy necessities: food, clothing, car repairs and toys for their kids. Many of those items are imported, he added.

Because essentials including heat, electricity and gas are commodities, low-income consumers don’t have flexibility to shop for bargains. They have to pay the market price, Manzo said during a joint interview over Zoom.

Tierney agreed.

“If the price of Lay’s potato chips goes up, well, I’m going to buy Ruffles,” she said during a phone interview. “When it comes to gasoline and oil, there is no substitute.”

Grocery prices are influenced in two ways, Tierney said. Not only do costs increase when farmers have to pay more for seeds, fertilizer and other needs, but the higher cost of fuel also is factored into food prices because most items are trucked to stores in semis, she said.

The researchers pointed to the origins of some popular grocery items that are imported, including chocolate, coffee and beef. They come from Europe, Africa and South America.

“This points out just how interdependent economies are,” Bruno said. “When you go to the supermarket … you are a global consumer.”

A jump in auto prices last year dominated headlines in national stories about the effects of tariffs on consumers. But Hoosier households were affected regardless of whether they bought a car, Bruno said.

Pricing surprises

Even small businesses were affected. The study found that tariffs cost the average small-business importer in Indiana $586,000 last year. That amount was almost double the national average of $306,000.

Sara Keltsch said last year’s tariffs made it impossible for her store, Gifts by Sara at The Monogram Shoppe, to stick to its budget.

“When we would place an order a year ago, (vendors) would give us a price,” she said. “And then when it came time to ship, they added the tariffs. What could we do? We couldn’t pass the tariff on to the customers.”

Although some giant corporations – including Apple, Amazon and Walmart – have received court-ordered tariff refunds from the federal government, most people say it’s not practical to do the same for small businesses.

“We don’t expect to get any money back,” Keltsch said. “But we will survive.”

Her store has moved several spots closer to West Jefferson Boulevard within Covington Plaza to accommodate expansion plans by another tenant. Keltsch reopened one week ago today in the new location with a name that better reflects the sales assortment. The business does much less monogramming than when it opened.

Gifts by Sara occupies 2,800 square feet, 14% smaller than the previous footprint, and offers a wide selection of products. When the store opened in its new location, more than 130 were lined up outside waiting to buy NeeDoh squishy fidget toys, which have become a fad.

“It was crazy,” Keltsch said about the situation when she arrived that day to unlock the front door.

NeeDohs are sold by a Massachusetts company but made in China. Keltsch estimated that less than half of her stock is imported. Her customers are paying more attention to where items are manufactured and choosing U.S.-made products when they can.

Her imported merchandise tends to be toys and some pottery, she said.

As a result of the tariffs, last month’s report said, small businesses nationwide raised prices, halted hiring and scaled back expansion plans.

Job growth reversed

As costs increase, consumers are increasingly experiencing financial decision fatigue, Tierney said.

“People are asking: ‘Do I really need this?’ “ she said, adding that sometimes they ponder the decision for so long that they don’t end up buying anything.

The University of Michigan’s Consumer Sentiment Index score in July was 11% lower than a year earlier, “reflecting continued concerns over elevated prices and the lasting effects of several years of high inflation,” the report said.

Rachel Blakeman, director of the Community Research Institute at Purdue University Fort Wayne, pointed to inflation in her comments. She said a shortcoming of the “Tariffs and the Midwest” study is that it didn’t fully explore the effects of inflation as it related to higher prices.

“Clearly, import taxes didn’t help bring prices down, but tariffs alone were not the cause of consumer frustration on high costs,” she said.

Dean Lyulkin, CEO of Cardiff, a small business lender based in San Diego, said teasing apart the factors that affect the economy is challenging.

“Tariffs rarely show up as a single, obvious charge,” he said in a statement. “They add pressure across supply chains at a time when households are already dealing with elevated energy costs and expensive credit. That means families can feel the impact through higher everyday prices even if they never buy a car or another major imported product.”

“For many consumers,” Lyulkin continued, “the result is less flexibility: postponing purchases, cutting discretionary spending and becoming more selective about where every dollar goes.”

Consumers’ habits are already changing, according to Tierney. She said, for example, that more people are going out to eat for breakfast because it’s cheaper than going out for lunch or dinner.

If enough people pull back, she said, that will lead to a shrinking economy.

“The same amount of money buys less, so less needs to be produced,” Tierney said. “And that’s going to affect the labor market.”

Blakeman also drew a direct line between tariffs and jobs.

“This report makes the point that consumers bear the cost of tariffs and that the upward pressure on prices didn’t result in additional domestic manufacturing jobs, which are a key part to the local economy,” she said in a statement.

The study found a steady 1% increase in U.S. manufacturing jobs from 2021 to 2024. That trend stopped abruptly in 2025, when 82,000 manufacturing positions were lost nationally. When the researchers added the lost jobs to those that would have been created if the existing trend had been extended, the gap amounted to 187,000 nationwide.

Looking specifically at Indiana, 6,258 manufacturing jobs were eliminated last year. If the growth trend had continued, 2,890 more positions would have been created, the study found. That resulted in a shortfall of 9,148 manufacturing jobs.

Filling a void

The Project for Middle Class Renewal’s mission is to investigate the working conditions of workers in today’s economy and elevate public discourse on issues affecting workers, according to its website.

The Midwest Economic Policy Institute is a nonprofit division of the Illinois Economic Policy Institute. The research organization delivers expert analysis on public policy issues affecting businesses, working families and taxpayers, according to its website.

The researchers relied on statistics published by the U.S. Census and departments of labor, commerce, agriculture in addition to the Federal Reserve, The Pew Charitable Trusts, individual states’ consumer spending numbers and academic sources.

“These really are the best possible sources,” Bruno said.

The report’s focus was chosen by Bruno and Manzo, and the work was funded by their nonpartisan organizations.

“We wanted to fill a void in the research,” Manzo said.

Although tariff proponents have claimed that the additional tax collected on imported goods would punish exporting countries, reliable studies have found that 90% – or more – of the higher cost is paid by the consumer, Bruno and Manzo said. They used 90% when making their calculations in what they described as a conservative choice.

The researchers noted that tariffs were in place before 2025 and have been used effectively to prevent countries with employers paying meager wages, poor working conditions and lax environmental controls from dumping cheap products onto the U.S. market.

Tariffs adopted last year, however, were more often invoked for political purposes, the study’s authors said. And the percentages weren’t consistent.

PFW’s Tierney said that inconsistency has consequences.

“It’s a lot of uncertainty for businesses and the consumer,” she said.

Blakeman commented on another reason tariffs haven’t been as effective as promised.

“Anyone who thought that tariffs would quickly re-shore domestic manufacturing operations was misguided,” she said. “Shifting from foreign to American production operations at any scale is going to take upwards of five years or more, if it even happens at all.”