Average tariff rate surged in 2025
As President Donald Trump renegotiated trade arrangements with several countries, one outcome remained consistent: higher costs for American companies and consumers. According to research released Thursday by the Federal Reserve Bank of New York, the average tariff rate on imported goods climbed to 13% in 2025, up sharply from 2.6% at the start of the year.
The New York Fed found that roughly 90% of the increased tariff burden was absorbed by U.S. firms. The duties targeted goods from Mexico, China, Canada and the European Union, and the study concluded that American businesses and consumers continue to shoulder most of the economic weight.
Exporters kept prices steady
Despite higher tariffs, exporting countries largely refrained from lowering prices to preserve U.S. demand. Instead, foreign producers maintained their pricing, passing the added cost directly to importers. Those importers then raised prices for shoppers, transmitting the impact throughout the supply chain.
The pattern mirrors developments from 2018, when tariffs introduced during Trump’s first term also led to higher consumer prices with limited broader economic disruption, according to earlier Federal Reserve analysis.
Independent studies echo findings
The Kiel Institute for the World Economy reported last month that it identified a near-complete pass-through of tariffs into U.S. import prices. After analyzing 25 million transactions, researchers found that exporters in countries such as Brazil and India did not reduce prices to offset the new duties.
Instead, trade volumes dropped as companies curtailed shipments rather than cut margins. The National Bureau of Economic Research reached a similar conclusion, estimating the tariff pass-through rate was close to 100%, indicating the costs were borne almost entirely by American buyers.
Impact on households
The Tax Foundation, a Washington-based think tank focused on fiscal policy, described the tariffs as effectively functioning as a new tax on consumers. The group estimated that the 2025 tariff increases cost the average U.S. household about $1,000, with that figure projected to rise to $1,300 in 2026.
Even when accounting for reduced purchasing in response to higher prices, the Foundation said the effective tariff rate now stands at 9.9%, marking the highest average since 1946. It added that any benefits from tax cuts contained in Trump’s “Big Beautiful Bill” could be fully offset by the added cost burden created by tariffs.
