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Trump Tariffs: Tracking the Economic Impact of the Trump Trade War

October 3, 2025

43 min read

By: Erica York, Alex Durante

Key Findings

• President Trump has threatened to impose International Emergency Economic Powers Act (IEEPA) tariffs on Canada, Mexico, and China related to fentanyl; national security tariffs on autos, auto parts, steel, and aluminum from all countries; and IEEPA tariffs on all countries related to an economic national emergency at a baseline rate of 10 percent with scheduled increases for more than 50 trading partners later in 2025. The US Court of Appeals ruled that the IEEPA tariffs are illegal, but they have been allowed to continue while the case is in appeal. The Supreme Court will hear oral arguments on November 5.
• Under all the imposed tariffs, the weighted average applied tariff rate on all imports would rise to 18.9 percent, and the average effective tariff rate, reflecting how much tariff revenue the new tariffs would raise after incorporating behavioral responses, would rise to 11.6 percent under the current tariffs—the highest average rate since 1943. However, if the IEEPA tariffs are permanently enjoined, the applied tariff rate would rise by a smaller amount, to 6.1 percent, and the effective tariff rate to 4.1 percent, the highest since 1973.
• Altogether, Trump’s imposed tariffs would raise $2.3 trillion in revenue over the next decade on a conventional basis ($1.5 trillion on a dynamic basis) and reduce US GDP by 0.8 percent, all before foreign retaliation. However, if the IEEPA tariffs are permanently enjoined, it would reduce the total revenue raised by Trump’s tariffs on a conventional basis by $1.7 trillion to $559 billion over 10 years and reduce the negative GDP effect to 0.2 percent.
• In total, the imposed tariffs would reduce market income by 1.4 percent in 2026 (1.1 percent from the IEEPA tariffs and 0.3 percent from the other tariffs) and amount to an average tax increase per US household of $1,300 in 2025 and $1,600 in 2026. However, if the IEEPA tariffs are permanently enjoined, the tax increases would be smaller at $300 in 2025 and $400 in 2026. Our estimates of reductions in market income understate the totality of effects Americans will face, as they exclude the loss of choice and higher prices for substitute goods.
• As of April 4, 2025, China, Canada, and the European Union had imposed retaliatory tariffs. Canada withdrew most of its retaliatory tariffs on September 1, leaving tariffs in place on US steel, aluminum, and autos. Imposed retaliation as of September 1, covering $223 billion in US exports, will reduce US GDP by another 0.2 percent and 10-year revenue by $146 billion on a dynamic basis.
• In 2025, Trump’s imposed and scheduled tariffs will increase federal tax revenues by $171.3 billion, or 0.56 percent of GDP, making the tariffs the largest tax hike since 1993. The tariffs are larger than the tax increases enacted under President Barack Obama and President George H.W. Bush. If the IEEPA tariffs are permanently enjoined, federal tax revenues would rise by $37.9 billion in 2025, or 0.12 percent of GDP, making the tariffs fall outside of the top 20 tax increases since 1940.
• The first Trump administration-imposed tariffs on thousands of products valued at approximately $380 billion in 2018 and 2019, affecting approximately 15 percent of US goods imports.
• The second Trump administration tariffs threaten all United States goods imports excluding a few categories, mainly USMCA trade (valued at $405 billion of imports in 2024) and certain energy-related and other imports under the April 2 tariffs (valued at $644 billion of imports in 2024, or $459 billion excluding Canada and Mexico). Based on 2024 import values, the tariffs affect approximately $2.2 trillion of US goods imports (excluding de minimis), or 69 percent of US goods imports. However, if the IEEPA tariffs are permanently enjoined, the remaining new tariffs would affect more than $500 billion, or 16 percent, of goods imports.