After UK and China trade deals, tariff rate still highest since 1934, Yale report says

In Lianyungang City, Jiangsu Province, China, a cargo ship docks at the container terminal berth of Lianyungang Port on May 9, 2025 for container loading and unloading.

Despite recent trade agreements with China and the United Kingdom, a Yale Budget Lab report released on Monday revealed that the U.S. continues to impose higher import tariff rates than at any point since the 1930s. The average effective tariff rate in the U.S. stands at 17.8%, the highest since 1934, even after factoring in these policy changes. This marks a 15.4 percentage points increase from the average effective tariff rate before Trump’s second term. The report stated that current tariff policies are anticipated to cost the average household $2,800 in the short term, without specifying a specific time frame.

In recent developments, U.S. officials agreed to reduce duties on China to a total of 30%, down from at least 145%, for a 90-day period as they continue economic and trade discussions. China reciprocated by lowering its duty on U.S. exports from 125% to 10%. Furthermore, President Donald Trump announced a trade deal with the U.K., confirming that a 10% tariff would remain in effect and that the first 100,000 imported U.K. automobiles would be subject to a 10% tariff instead of 25%.

Prior to the trade agreements with China and the U.K., consumers were facing an overall average effective tariff rate of 28%, the highest since 1901, according to a previous analysis by the Yale Budget Lab on April 15. The recent report highlighted that the decrease from this average tariff rate is mainly attributed to lower rates on Chinese imports, with minimal effects from the US-UK trade deal on average tariff rates.

Economists suggest that businesses and consumers are likely to adjust their purchasing behavior to avoid the increased costs associated with tariffs, particularly from China. Taking into account these substitution effects, the Yale Budget Lab estimates that the average effective tariff rate would be 16.4%, the highest since 1937. The report noted that the timing of these substitutions is uncertain, as some changes may occur quickly within days or weeks, while others may take longer to materialize.