U.S. Tariffs Forecast To Hit Highest Levels Since 1910 Under Trump

U.S. President Donald Trump yesterday announced sweeping new tariff increases for countries around the world. Estimates by the rating agency Fitch highlight how these hikes could drastically raise the average effective tariff rate on all U.S. imports from 2.5 percent in 2024 to 22 percent in 2025. This would put it at roughly the same level as in 1910.

In 1934, the United States passed the Reciprocal Trade Agreements Act, a law that gave the administration of President Franklin D. Roosevelt the authority to reduce tariffs through bilateral trade agreements without requiring congressional approval for each individual change. At that time, the goal had been to combat the Great Depression, promote international trade and ease the protectionism of the Smoot-Hawley Tariff (1930). This led to a significant fall in the average effective interest rate on U.S. imports, which has remained in single figures since 1947.

Trump announced new tariffs for trading partners around the world on Wednesday. Imports from the European Union will be subject to surcharges of 20 percent, and those from China will be subject to a tariff of as much as 34 percent. He cited 10 percent as a "minimum rate" for other countries. EU Commission President Ursula von der Leyen stated that the new tariffs are a "severe blow to the global economy," during a visit to the Uzbek city of Samarkand. She expressed "deep regret" for the decision.