Tariffs will be the highest since 1937
There's another way to think of tariffs: A new tax for Americans.
Tariffs starting at 10% and reaching as high as 50%, which Trump levied on April 2 against dozens of countries including China and in The European Union, are effectively taxes on imported goods that are paid by companies and those costs are likely to be passed onto consumers.
This latest round of tariffs announced on April 2 goes into effect on April 5, raisingthe average tariff rate on all imports to 16.5% from 2.5% in 2024, which isthe highest average rate since 1937, according to an analysis by nonprofit Tax Foundation.
Thetariffs amount to an average tax increase of more than $1,900 per U.S. household in 2025 and will reduce after-tax income by an average of 1.9%, Tax Foundation said.
Prices for raw materials that are made into a wealth ofconsumer goods are expected to rise under the tariffs, including big hits toleather, crops, metals and wool and silk, according to Yale Budget Lab, which analyzed all tariffs announced up to April 2.
On the other hand, all announcedtariffs are expected to bring innearly $2.9 trillion in revenue over the next decade before foreign retaliation, but will reducegross-domestic product, a key metric of the health of the economy,by 0.7%, Tax Foundation said.
But there is a good chance many of the tariffs will be negotiated down or away in the coming months or years, meaning that revenue won't be raised.
Stocks plunged after Trump announced the latest round of tariffs, evaporating more than $3.5 trillion in value.
It is surprising that equity prices are not down more, said Neil Dutta, chief economist at Renaissance Macro, to MarketWatch. Perhaps this means investors believe negotiations are in store to bring down tariff rates later."
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Posted: 2025-04-04 23:25:59
