'The Tariff Cost On Food, Clothes Is A Difficult Tax For The Poorest People' - Mark Cuban Says Tariffs Must Be Used The Right Way

Mark Cuban recently weighed in on the impact of tariffs, highlighting how they could disproportionately affect lower-income Americans. 

Cuban’s comments came after he listened to Commerce Secretary Howard Lutnick's explanation on the "All-In Podcast" about how President Donald Trump views tariffs as a form of consumption tax. Cuban agreed with Lutnick’s assessment, but also raised concerns about the potential economic consequences for the country's most vulnerable populations.

Don't Miss:

• Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Many are rushing to grab 4,000 of its pre-IPO shares for just $0.26/share!
• How do billionaires pay less in income tax than you? Tax deferring is their number one strategy.

Tariffs as a Consumption Tax

In his post on X, Cuban explained that tariffs function like a consumption tax because they are essentially passed on to consumers through higher prices on imported goods. According to Cuban, companies that import goods pay the tariffs, but those costs are often transferred to consumers through increased prices on everyday items like food and clothing.

Trump's proposed plan suggests that revenue from tariffs could replace income taxes.

"The biggest losers are the poorest people who make under the standard deduction. (15k, single 30k joint)," Cuban wrote. "They already pay no income taxes. So the tariff cost on food, clothes etc is a difficult tax for them.”

Cuban pointed out that while this approach could reduce the tax burden for some people, it would create winners and losers depending on their financial situation and spending habits.

Trending: Bezos' Favorite Real Estate Platform Launches A Way To Ride The Ongoing Private Credit Boom

How Tariffs Could Hurt Lower-Income Households

In a reply to his own post, Cuban continued to lay out how Trump's tax and tariff plans could hurt everyday Americans. 

"For example," Cuban wrote, "if you are on Social Security or earn tips of 36K, you pay about $2K in taxes…The math says if you spend less than 20K on items that have 10% in tariffs attached…you benefit because you saved more in taxes than the under $2K you paid because of tariffs."

However, Cuban noted that if someone is not eligible for tax savings — such as individuals who don't earn tips, overtime, or Social Security — tariffs would only increase their expenses without any offsetting tax relief.

Trending: It’s no wonder Jeff Bezos holds over $250 million in art — this alternative asset has outpaced the S&P 500 since 1995, delivering an average annual return of 11.4%. Here’s how everyday investors are getting started.

The Impact on Domestic Manufacturing

Cuban also addressed the potential benefits and drawbacks of tariffs for domestic manufacturing. He acknowledged that tariffs could encourage companies to move production to the U.S., which would create jobs and increase state tax revenue.

However, Cuban pointed out that this shift would also reduce tariff revenue to the federal government since fewer goods would be imported. At the same time, Trump's proposed plan to reduce corporate taxes from 21% to 15% could further reduce federal tax revenue. Cuban warned that this could create a significant net loss for the government.

See Also: Have $200K saved? Here's how to turn it into lasting wealth

Tariffs Are a Tool — Not a Solution

When an X user asked why other countries impose tariffs if they're "so terrible," Cuban responded that tariffs are not inherently bad — it's how they are used that matters. 

"Strategically they are great," he said. "They can help domestic industries." But using tariffs to offset income taxes would require imposing them on a wide range of products, effectively creating a consumption tax that would disproportionately impact lower-income Americans.

Cuban posted a response to another user, saying that while replacing income taxes with tariff revenue is theoretically possible, the overall economic impact could be negative. "Cutting costs is a great goal," Cuban wrote. "Firing, cutting programs, and tariffs all at once could create real economic issues for the country."

Cuban's analysis suggests that while tariffs could provide tax relief for some Americans, they would place a heavier burden on those least able to absorb increased costs. His concern is that the proposed strategy lacks a clear plan to balance the benefits and drawbacks, potentially creating more economic challenges than solutions.

Read Next:

• Inspired by Uber and Airbnb – Deloitte's fastest-growing software company is transforming 7 billion smartphones into income-generating assets – with $1,000 you can invest at just $0.26/share!
• Can you guess how many retire with a $5,000,000 nest egg? The percentage may shock you.