Since returning to the White House in January, President Donald Trump has overturned decades of U.S. trade policy, layering a wall of tariffs over what was once a largely open economy.
Tariffs Build a Wall Around the Economy
Trump’s new import taxes, set at double-digit rates for almost every country, have disrupted global commerce and tightened consumer and business budgets worldwide. The policy has also generated tens of billions of dollars for the U.S. Treasury. Trump has argued that these steep tariffs are needed to reclaim wealth that the United States claims was “stolen,” to narrow the nation’s long-standing trade deficit, and to bring manufacturing jobs back home.
However, the rapid changes in tariff policy-announcing rates, then suspending or altering them before issuing new ones-have made 2025 one of the most turbulent economic years in recent memory. The global supply chain has been upended, and households face higher prices.
The Effective Tariff Rate: A Sharp Climb
A key metric for understanding the impact on U.S. consumers and businesses is the “effective” tariff rate, which averages the actual tariffs applied to imported goods. According to data from the Yale Budget Lab, the effective U.S. tariff rate peaked in April 2025. Even in November, the rate was nearly 17 percent-seven times the average seen in January and the highest level recorded since 1935.
Revenue and the Trade Deficit: Numbers That Matter
Trump’s tariffs have indeed generated revenue. Through November, tariff receipts surpassed $236 billion, a figure that exceeds the totals collected in many previous years. Despite this, tariff revenue still represents only a fraction of the federal government’s total income and falls far short of the amounts Trump claims could replace federal income taxes or fund windfall dividend checks for Americans.
The U.S. trade deficit has also changed during the year. The deficit reached a monthly record of $136.4 billion in March, as consumers and businesses rushed to import goods before new tariffs were imposed. By September, the deficit had narrowed to $52.8 billion-the lowest level for that month in the data available. Yet the year-to-date deficit remains 17 percent larger than the January-September period of 2024.
Import Shifts: China, Canada, Mexico and Beyond
Trump’s 2025 tariffs affect nearly every country, but the impact is most pronounced in trade with China, which was once the largest source of U.S. imports and is now the third-largest after Canada and Mexico. According to Chad Bown of the Peterson Institute for International Economics, tariffs on Chinese goods now average 47.5 percent.
The value of goods imported from China fell almost 25 percent during the first three-quarters of the year. Imports from Canada also declined, while imports from Mexico, Vietnam, and Taiwan grew year-to-date.
Market Reactions: Stock Index Volatility
For investors, the most volatile moments in the stock market this year coincided with the sharpest swings in tariff policy. The S&P 500 experienced its biggest daily and weekly fluctuations in April, and its largest monthly losses and gains occurred in March and June, respectively.
Key Takeaways
- Trump’s 2025 tariffs have raised over $236 billion in revenue, the highest since the early 2000s.
- The effective tariff rate peaked at nearly 17 percent in November, a level unseen since 1935.
- The U.S. trade deficit fell from a March record of $136.4 billion to $52.8 billion in September, yet remains 17 percent above the 2024 baseline.
Trump’s aggressive tariff strategy has reshaped the U.S. trade landscape, strained global supply chains, and injected volatility into the financial markets. While the policy has generated significant revenue, its long-term effects on the economy and the trade balance remain uncertain.
