Thread by @ernietedeschi

New @The_Budget_Lab tariff analysis incorporating 1) the 50% copper tariff, and 2) the July 7 & 9 letters to 22 countries with new "reciprocal" tariff rates. Both go into effect August 1. In brief...
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• Consumers face an overall average effective tariff rate of 18.0%, a 15.6pp increase from 2024 & the highest since 1934. After consumers & businesses shift spending in reaction to the tariffs, the average tariff rate will be 16.9%, a 14.5pp increase & the highest since 1935
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@The_Budget_Lab • The price level from all 2025 tariffs rises by 1.8% in the short-run, the equivalent of an average per household income loss of $2,400 in 2025$, assuming no Federal Reserve reaction. The post-substitution price increase settles at 1.5%, a $2,000 loss per household.
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@The_Budget_Lab • Tariffs are a regressive tax, especially in the short-run. The short-run burden on 1st decile households (as a % of income) is more than 3x that of the top decile (-3.3% versus -1.0%).
• The average annual cost to the 1st & top decile are $1,300 & $4,800 respectively.
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@The_Budget_Lab • The 2025 tariffs disproportionately affect clothing and textiles, with consumers facing 39% higher shoe prices and 37% higher apparel prices in the short-run. Shoes and apparel prices both stay 18% higher in the long-run.
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@The_Budget_Lab • US real GDP growth over 2025 is -0.7pp lower from all 2025 tariffs. In the long-run, the US economy is persistently -0.4% smaller, the equivalent of $110B annually in 2024$.
• The unemployment rate rises +0.4pp by the end of 2025, & payroll employment is -553,000 lower.
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@The_Budget_Lab • In the long-run, tariffs present a trade-off. US manufacturing output expands by 2.0%, but these gains are more than crowded out by other sectors: construction output contracts by 3.6% and agriculture declines by 0.8%.
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@The_Budget_Lab • Canada has borne the brunt of the damage from US tariffs so far, with its long-run economy -1.9% smaller in real terms. China’s economy is -0.2% smaller, about 1/2 as large as the hit to the US. The UK’s is 0.2% bigger thanks in part to the benefits of US-UK trade deal.
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@The_Budget_Lab • All tariffs to date in 2025 raise $2.6 trillion over 2026-35, with $418 billion in negative dynamic revenue effects, bringing dynamic revenues to $2.2 trillion.
• Tariffs under July 9 policy reach about 2/3 of April 2 policy (18% vs. 28% effective tariff rate)
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@The_Budget_Lab Full @The_Budget_Lab report here:
10/10budgetlab.yale.edu/research/state…