Unpicking the thicket of US tariff numbers

The multiplying number of tariffs in force plus the growing web of exemptions and country- and product-specific deals is making it harder to measure tariff rates. Last month, we broadened our approach to calculating the average effective tariff rate to cover around 1,200 products for the US’s top 30 trading partners. This allows us to better capture sector- and country-specific exclusions

• We base our estimate of the average statutory tariff rate on 2024 import shares, but this overestimates the effective tariff rate because of the incentive to reroute trade to minimize duties.
• Supply chains have shifted from China to other countries in Asia that face a lower tariff rate, while USMCA compliance – a key driver of Canada and Mexico tariff rates – appears to have risen more than we anticipated.
• The rest of the gap is likely explained by one-off issues. Lags due to shipping and collection delays, as well as compliance issues due to frequent policy changes, all appear to be playing a role. These will fade with time, narrowing the gap between statutory and effective tariff rates.
• All told, the thicket of exemptions and country-specific deals means specific details are increasingly a more important driver of the level at which tariffs end up than the headline announcements. That was also true in previous periods of high trade barriers.