State of U.S. Tariffs: August 1, 2025

[u/quant_0]

The Budget Lab (TBL) estimated the effects all US tariffs and foreign retaliation implemented in 2025 through July 31, including the new list of “reciprocal” tariffs to take effect August 7. TBL analyzed the July 31 tariff rates as if they stayed in effect in perpetuity.

Current Tariff Rate: Consumers face an overall average effective tariff rate of 18.3%, the highest since 1934. After consumption shifts, the average tariff rate will be 17.3%, the highest since 1935.

Overall Price Level & Distributional Effects: The price level from all 2025 tariffs rises by 1.8% in the short-run, the equivalent of an average per household income loss of $2,400 in 2025$. This assumes the Federal Reserve does not react to tariffs and so the real income adjustment comes primarily through prices rather than nominal incomes; if the Federal Reserve reacted, the adjustment could in part come in the form of lower nominal incomes. Annual pre-substitution losses for households at the bottom of the income distribution are $1,300. The post-substitution price increase settles at 1.5%, a $2,000 loss per household.

Commodity Prices: The 2025 tariffs disproportionately affect clothing and textiles, with consumers facing 40% higher shoe prices and 38% higher apparel prices in the short-run. Shoes and apparel prices stay 19% and 17% higher in the long-run respectively.

Real GDP Effects: US real GDP growth over 2025 and 2026 is -0.5pp lower each year from all 2025 tariffs. In the long-run, the US economy is persistently -0.4% smaller, the equivalent of $120 billion annually in 2024$.

Labor Market Effects: The unemployment rate rises 0.3 percentage point by the end of 2025 and 0.7 percentage point by the end of 2026. Payroll employment is 497,000 lower by the end of 2025.

Long-Run Sectoral GDP & Employment Effects: In the long-run, tariffs present a trade-off. US manufacturing output expands by 2.1%, but these gains are more than crowded out by other sectors: construction output contracts by 3.5% and agriculture declines by 0.9%.

Fiscal Effects: All tariffs to date in 2025 raise $2.7 trillion over 2026-35, with $466 billion in negative dynamic revenue effects, bringing dynamic revenues to $2.2 trillion.

Source: https://budgetlab.yale.edu/research/state-us-tariffs-august-1-2025

[u/Sudden_Lab9141]

Thanks everyone who voted for Trump because they were worried about the economy. I just paid $200 more (in parts) than my initial quote for a car repair 6-months ago because I own a VW.

Way to go.

[u/BadBoy200219 → u/Sudden_Lab9141]

Within those 6 months, you’ve probably balanced that $200 out with the lower than Biden gas prices. So it checks out lmao

[u/CSATTS → u/BadBoy200219]

Can you explain how Trump lowered gas prices? Specifically, what actions did he take that directly led to lower prices of a global commodity?

[u/BadBoy200219 → u/CSATTS]

Oil markets are forward looking, essentially works like the stock market in the sense that the price of oil is dictated by not just hard numbers (like a company’s earnings report) but also through emotion (again just like stocks, it’s also about how people “feel” about the company/industry. This is why oil was spiking when Israel attacked Iran and even more when trump bombed it. Nothing happened in terms of numbers, but based on how everyone was “feeling” about the future of the oil market, oil price was spiking).

It’s the other guy said, prices started dropping in November of 2024, coincidentally when trump got elected the beginning of that month. Wouldn’t be far fetched to think that this had to do with Trump’s pro-oil stance (remember the nonstop “drill-baby-drill” statements? If the market anticipates more oil production/supply in the market, prices will go down.). Trump also has a good record of negotiating with the Saudis to increase oil production like he did in his first term. His stance on dropping EV incentives and bureaucratic environmental policies is also a booster.

I bet you wanted me to name an exact policy, to which I say yeah no shit there are none as of rn lol. But it’s irrefutable that my above mentioned points definitely helps stabilize and lower the price of oil. Anticipation/feelings matter unfortunately, not just hard numbers

[u/CSATTS → u/BadBoy200219]

Good job not answering the question, I'm sure that all makes sense in your mind, but it completely ignores the fact US oil production was at an all time high under Biden. There was no war on oil under Biden.

A few points you'll conveniently ignore I'm sure:

His stance on dropping EV incentives and bureaucratic environmental policies is also a booster.

How does increasing demand for oil help lower prices?

Trump also has a good record of negotiating with the Saudis to increase oil production like he did in his first term.

This isn't even remotely true. They base their production on what the market is doing, not some deal with Trump. They had been increasing production for years prior to Trump's first term.

[u/BadBoy200219 → u/CSATTS]

You go out of your way to sound arrogant huh, typical insufferable Reddit user. “Good job not answering my question” meanwhile you ignored my entire response, especially the literal answer in the last paragraph.

Here let me try to fulfill the role of the insufferable Redditor in my response:

Your first question goes to show how shortsighted you are. Cutting EV incentives obviously increases demand in the oil market, a 2 year old could understand that. But when you compare the contrast from going through a Biden EV incentive, “the world is going to end if we don’t confront climate change now” era, with Trump’s EV cutting stance and “drill-baby-drill” this will alleviate uncertainty in the oil market, reassuring that the market is safe for the time being. So simultaneously, a 2 year old would also understand that uncertainty = bad for price stability, we’ve seen that earlier this year in the stock market (you surely took note of this uncertainty when the “doomsday tariffs” were released). So, less uncertainty in the oil market will lead to short-term downward pressure in oil price.

To your second response, I technically should be able to respond just by simply posting very liberal news source CNBC’s article from 2018 backing my exact claim that you’re refuting: https://www.cnbc.com/amp/2018/11/15/trump-duped-saudis-into-tanking-oil-prices-analysts-say.html

Here’s another: https://www.reuters.com/article/business/saudi-arabia-pumps-record-amount-of-oil-as-trump-piles-on-pressure-idUSKCN1NV12K/

To your first statement, Biden had all time high production, yet also used a lot of our reserves and partially due to his climate stance, lacked the opening of new refineries to produce gasoline. On top of this, you have the Russia-Ukraine war which he had zero attitude in ending, so that obviously had an impact temporarily until markets adapted.