After UK and China trade deals, tariff rate still highest since 1934, Yale report says
Imports face steep levies despite recent trade deals the Trump administration reached with China and the U.K
The tariff rate the U.S. puts on imports remains higher than any point since the 1930s, despite trade deals struck with China and the United Kingdom in recent days, according to a Yale Budget Lab report issued Monday.
The total U.S. average effective tariff rate is 17.8% — the highest since 1934 — even after accounting for these policy changes, according to the Yale Budget Lab.
That's equivalent to an increase of 15.4 percentage points from the average effective tariff rate before Trump's second term, the report said.
Current tariff policies in effect are expected to cost the average household $2,800 over the "short run," according to the report. It doesn't specify a time frame.
China and U.K. trade deals
U.S. officials agreed Monday to slash duties on China to 30% total, down from at least 145%, for 90 days as they continue economic and trade discussions. China dropped its duty on U.S. exports to 10% from 125%.
President Donald Trump also announced a deal with the U.K. on Thursday. While light on specifics, the president confirmed a 10% tariff would remain in place and that the first 100,000 imported U.K. automobiles will be tariffed at 10% rather than 25%, for example.
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The White House has enacted many other tariffs, including a 10% across-the-board tariff on most U.S. trading partners. There are additional levies tied to specific products like steel, aluminum and automobiles, and certain imports from Canada and Mexico.
Consumers will likely alter their buying
Prior to the China and U.K. trade pacts, consumers faced an overall average effective tariff rate of 28%, the highest since 1901, the Yale Budget Lab estimated in a prior analysis on April 15.
The estimated decline from that average tariff rate "is almost entirely due to the lower rates on Chinese imports — the US-UK trade deal has minimal effects on average tariff rates," its most recent report said.
Businesses and consumers are likely to change their purchase behavior to avoid the higher costs associated with tariffs, especially from China, according to economists.
After accounting for these substitution effects, the average effective tariff rate would be 16.4%, the highest since 1937, the Yale Budget Lab estimates.
The timing of that substitution is "highly uncertain," it said.
"Some shifts are likely to happen quickly — within days or weeks — while others may take longer," according to the report.
This story originally appeared on: CNBC - Author:Greg Iacurci
