Statutory tariff rates (which can differ from actual rates) on US imports have risen dramatically to levels not seen since the 1930s, with the trade-weighted average rate at 27% in September 2025. Imports from 176 exporters, on goods accounting for more than 70% of total US imports, faced higher tariffs than at the end of 2024.
While fears of a trade war between the United States and affected countries rose along with rising tariff rates, retaliation has been limited, with China the important exception, as noted in Bullet 3 below. China responded in kind to US announcements of large and broad tariffs, with both countries pushing each other beyond 100 percent rates on nearly all traded goods. Though subsequently reducing those bilateral tariff rates, they remain historically high.
What are the effects on US producers and consumers, and for the dollar? The authors examine the effects of the tariffs during last year’s tariff hikes (as of September 2025), and during the previous episode of tariff changes during 2018-19 to find the following:
- Actual tariff rates in the current period are only about half the statutory rates due to shipment lags, exemptions, trade agreement utilization, and enforcement issues. This is one reason why price impacts so far are lower than many April forecasts predicted. While shipment lags will dissipate, other factors may persist.
- US importers and consumers largely bear the tariff costs, not foreign exporters. Tariff pass-through rates were high in both periods, 80% in 2018-2019 and 94% in 2025, meaning tariff-inclusive import prices rose nearly in step with the tariffs, as exporters generally did not significantly lower prices.
- Chinese goods dropped from 22% of US imports in late 2017 to 8% by September 2025. Countries like India and Vietnam gained significant market share as alternative suppliers, though it’s unclear how much this reflects genuine production in India and Vietnam vs. Chinese goods routed through these countries.
- Because imported inputs are crucial for US manufacturers and pass-through is high, American producers face substantial cost increases. The study calculates that for some sectors, the effective “production tariff” rate (a hypothetical tax rate on production costs that might have an equivalent impact on U.S. manufacturing as the import tariffs) exceeded 2 percentage points. Manufacturing overall saw an increase above 1 percentage point in 2025.
- Finally, regarding the dollar, unlike 2018-2019 when the dollar strengthened as predicted, the dollar depreciated significantly in 2025 despite the tariffs, suggesting other economic forces are likely at play.
Questions persist regarding the impact of tariffs on the US economy, especially given the unpredictable nature, in terms of substance and timing, of tariff policy. This work offers current context and a framework for evaluating ongoing effects.