Since early 2025, the administration has put broad new tariffs on imports—starting with a 10% baseline on almost everything and raising rates even higher on some countries and products. These tariffs make many goods more expensive, so prices rise and families’ buying power falls. The constant policy changes also create uncertainty, which leads businesses to slow hiring and investment. Other countries hit back with their own tariffs, hurting U.S. exports, especially in farming and tech. Supply chains get disrupted, parts cost more, and factories report weaker output. Forecasts and data show slower growth, higher inflation, and more risk of job losses as a result. The pain isn’t shared evenly: lower-income households feel the squeeze the most because price hikes take a bigger share of their budgets. Overall, the report finds the tariffs and the confusion around them are dragging down the U.S. economy.
¶ The administration implemented sweeping and escalating tariffs in 2025
- On April 5, 2025, the White House imposed an additional 10% ad valorem duty on virtually all imports, with higher country‑specific rates to follow; China’s rate was lifted to 84% on April 9 and 125% on April 10. (govinfo.gov)
- As summarized by the Library of Congress/CRS, current tariff settings in 2025 include a 10% global baseline, country‑specific rates up to 41%, and a 40% penalty for transshipment to evade duties. (congress.gov)
- On October 17, 2025, the administration added new tariffs of 25% on imported medium‑ and heavy‑duty trucks and parts (and 10% on buses), further broadening coverage. (reuters.com)
¶ The tariffs have raised prices and eroded purchasing power
- The Congressional Budget Office concluded that the new tariffs will raise consumer and capital goods prices and increase inflation by an average of 0.4 percentage points in 2025–2026, reducing household purchasing power. (reuters.com)
- Goldman Sachs estimates that U.S. consumers will ultimately bear about 55% of tariff costs in 2025 as firms pass through higher import prices. (nbcnewyork.com)
- The Atlanta Fed’s Tariff Price Tool details how tariffs feed directly and indirectly into the PCE price index via higher import prices and cost pass‑through along supply chains. (atlantafed.org)
- The OECD projects U.S. headline inflation to pick up sharply to 3.9% by end‑2025 as tariffs are implemented and passed on to consumers. (oecd.org)
¶ Business hiring, investment, and sentiment have been depressed by tariff uncertainty
- The Federal Reserve’s May 2025 Beige Book (Boston) reports “uncertainty related to tariffs” led firms to delay hiring and slightly reduce headcounts. (federalreserve.gov)
- Small‑business optimism slipped in September 2025, with NFIB respondents citing tariff impacts and elevated uncertainty; NFIB’s Uncertainty Index jumped to 100. (reuters.com)
- S&P Global notes that the tariff regime has created market volatility and cross‑sector uncertainty that is tempering deal‑making and investment. (spglobal.com)
- Measured policy uncertainty has been elevated in 2025, as reflected in the U.S. Economic Policy Uncertainty Index. (fred.stlouisfed.org)
- Policy stops and starts—including a 90‑day suspension of certain country‑specific tariffs announced just days after they were slated to take effect—have amplified planning uncertainty. (congress.gov)
¶ Trading partners retaliated, cutting into U.S. exports—especially in agriculture and technology
- Commerce’s foreign retaliation tracker shows China escalated retaliatory tariffs to as high as 125% in April 2025 following U.S. increases, with broader non‑tariff actions as well. (trade.gov)
- U.S. soybean exports to China collapsed in 2025; USDA‑cited projections show U.S. agricultural exports to China falling to $17 billion in FY2025 and $9 billion in FY2026. (fb.org)
- Analysts estimate tit‑for‑tat measures could cut U.S. exports of Information Technology Agreement products by $56–$82 billion, shrinking U.S. tech sales abroad. (itif.org)
- CBO warns that tariffs and retaliation reduce investment, productivity, and real output even as they raise revenues. (reuters.com)
¶ Supply chains and manufacturing have been disrupted, raising costs and curbing output
- U.S. manufacturing slipped back into contraction in March 2025, with ISM respondents citing tariffs and higher input costs; factory‑gate inflation hit a near three‑year high. (reuters.com)
- By August, manufacturing contracted for a sixth straight month as tariffs weighed on production and hiring. (reuters.com)
- ISM components showed lengthening supplier delivery times and a plunge in imports—signs of tariff‑related bottlenecks. (insurancejournal.com)
- S&P Global reports “front‑running” of purchases ahead of tariff hikes and a subsequent dip in spending as price pressures and uncertainty mounted. (spglobal.com)
¶ Macroeconomic data and forecasts indicate material economy‑wide harm in 2025
- CBO’s September update lowered its 2025 outlook, attributing weaker growth, higher inflation (3.1%), and higher unemployment (4.5%) in part to the new tariffs’ drag on consumer spending and business costs. (apnews.com)
- Goldman Sachs cut its 2025 growth forecast and expects the average U.S. tariff rate to rise by about 10 percentage points this year, implying slower GDP and higher inflation. (goldmansachs.com)
- BEA data cited by S&P Global show real GDP fell 0.3% in Q1 2025, with an import surge ahead of tariffs depressing measured output and foreshadowing a spending pullback. (spglobal.com)
- CBO’s June analysis concludes that, on net, real (inflation‑adjusted) U.S. output will fall as a result of the tariffs in place by mid‑May. (reuters.com)
- Yale’s Budget Lab finds the 2025 tariffs are a regressive tax in the short run, reducing disposable income by a larger percentage for lower‑income households than for higher‑income households. (budgetlab.yale.edu)
- The Tax Foundation estimates a 10% universal tariff raises taxes on U.S. households by about $1,253 on average in 2025, with larger burdens if rates are higher. (taxfoundation.org)
- Penn Wharton Budget Model projects sizable long‑run declines in GDP and wages from the April 2025 tariff package and substantial lifetime income losses for typical households. (budgetmodel.wharton.upenn.edu)