On May 9, 2025, a cargo ship marsh in the container terminal berth at Lianyonggan Port for loading containers in Liayonggan city, Jiangsu province, China.
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According to a Yale Budget Lab report issued Monday, despite recent hit by trade deals between China and the UK, the US tariff rate on imports remains higher than any point since the 1930s and since the 1930s.
According to Yale Budget Lab, the average effective tariff rate in the US is 17.8% (highest since 1934).
This amounts to a 15.4 percentage point increase from Trump’s average effective tariff rate before the second term, the report said.
The current tariff policy is expected to cost an average household “short-term” $2,800, according to the report. No time frames are specified.
Trade between China and the UK
US officials agreed on Monday to reduce their duties in China from at least 145% to a total of 30% for 90 days, continuing economic and trade discussions. China has reduced its US export obligations from 125% to 10%.
President Donald Trump also announced his contract with the UK on Thursday. Light is on the details, but the president has confirmed that 10% tariffs will be enforced, and that the first 100,000 imported UK cars will receive tariffs at 10% rather than 25%.
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The White House has enacted many other tariffs, including a full 10% tariff on most US trading partners. There are additional taxation tied to certain products such as steel, aluminum, and automobiles, as well as certain imports from Canada and Mexico.
Consumers may change their purchases
Prior to the trade agreement between China and the UK, consumers faced an average effective tariff rate of 28%, the highest since 1901.
The estimated decline from that average tariff rate is “almost entirely due to the proportion of Chinese imports, so the US-UK trade contract has a minimal impact on average tariff rates,” the latest report said.
Economists say businesses and consumers may change their purchasing behavior to avoid higher costs, particularly related to tariffs from China.
After taking these substitution effects into account, the average effective tariff rate is 16.4%, the highest since 1937, Yale’s Budget Lab estimates.
He said the timing of the alternative was “very uncertain.”
“Some shifts are likely to occur quickly within days or weeks, while others can take longer,” according to the report.
