29 Sept 2025
An institution regularly assesses US effective tariff rates and their economic repercussions. American consumers are projected to face an average effective tariff rate of 18.6%, the highest since 1933, leading to an estimated $2,700 loss in household income and significant price increases across essential goods.
An institution conducts weekly assessments of all US effective tariff prices and retaliatory actions, projecting the future trajectory of effective tariff rates.
American consumers are currently facing an effective tariff rate of 17.68%, which is projected to increase to an average of 18.6%. After accounting for anticipated consumer behavioral changes, the effective tariff rate is expected to stabilize at 17.7%. These figures represent the highest levels observed since 1933 and 1934, respectively. Earlier in the year, specifically in late 20-24, this rate stood at 0.24%, marking an eightfold increase compared to eight months prior.
The increase in tariffs is estimated to result in an average loss of approximately $2,700 from each household's income.
Tariffs are inherently regressive, particularly in the short term, meaning they extract a larger proportion of income from low-income households compared to high-income earners, thereby imposing greater financial strain.
With rising prices, consumers are compelled to shift towards and substitute goods with more affordable alternatives.
Clothing prices are anticipated to increase by 37% in the short term before consumers transition to substitutes; even after substitution, prices will remain 17% higher in the long term.
Consumer electronics, encompassing smartphones, tablets, televisions, and computer equipment, face tariffs equivalent to a 17% tax, with a long-term price increase of 12.5% projected.
Automobile prices are predicted to rise by 12.4% in the short term and 9.4% in the long term.
The metals sector is expected to experience the most substantial price increases, with a 41% rise in the short term and 17% in the long term.
Prices for agricultural products are forecast to increase by 31.5% in the short term and 18% in the long term, consequently making automobiles and food significantly more expensive for American consumers in the future.
The ability of American consumers to replace goods with local production is constrained by the fact that many goods are manufactured using imported raw materials, which themselves are subject to higher tariffs.
The general price level stemming from all tariff increases implemented in 2025 is expected to rise by 2% in the short term, mirroring the estimated $2,700 loss in household income.
Once these tariffs fully exert their impact, the short-term burden on the lowest income deciles will be approximately three times greater than that on the highest income decile.
When these tariffs fully take effect, the short-term burden on the lowest income deciles will be approximately three times higher than on the highest income decile.
| Category | Metric | Short-Term Impact | Long-Term Impact |
|---|---|---|---|
| Overall Tariff Rate | Average Effective Tariff Rate | 18.6% (highest since 1933) | 17.7% (after consumer adjustments, highest since 1934) |
| Household Income | Estimated Income Loss per Household | $2,700 | $2,700 (implied sustained) |
| Tariff Regressivity | Burden on Lowest vs. Highest Income Deciles | 3x higher on lowest deciles | Disparity persists |
| Clothing Sector | Price Increase | 37% | 17% (after substitution) |
| Consumer Electronics Sector | Price Increase (equivalent tax) | 17% (tax equivalent) | 12.5% |
| Automobile Sector | Price Increase | 12.4% | 9.4% |
| Metals Sector | Price Increase | 41% | 17% |
| Agricultural Products Sector | Price Increase | 31.5% | 18% |
