Analysis: Trump’s Tariffs Reshape U.S. Trade

In October 2024, U.S. President Donald Trump announced the imposition of a 100% tariff on China and export controls on key software effective November 1. This move, intended as a maximalist pressure tactic before renewed U.S.-China tariff talks, is expected to have a major impact on bilateral trade and the global trading landscape, marking a significant escalation in U.S. trade policy. Since the start of Trump’s second term in 2025, the U.S. has sharply increased tariffs, including implementing “reciprocal tariffs” and “Section 232 tariffs,” resulting in higher tariff revenues and average tariff rates, and causing notable shifts in U.S. import and export trade patterns. The article systematically examines the changes in U.S. tariff revenues, effective tariff rates by trading partners and product categories, and the evolving structure of U.S. trade in the first half of 2025[para. 1].

The analysis is based on various official data sets: average tariff rates use U.S. Census Bureau figures from January to June 2025; trade volumes and balances use U.S. Department of Commerce data from January to July; and tariff revenues are sourced from U.S. Treasury data from January to August[para. 2].

U.S. tariff revenue has surged, becoming the fourth-largest source of federal revenue, behind only income tax, social security tax, and corporate income tax. From January to August 2025, cumulative tariff revenue was $144.4 billion, 2.8 times higher than the previous year, and accounted for 4.0% of total federal revenue, up by 2.5 percentage points. This increase is mainly attributed to rising tariff rates, as actual average U.S. tariff rates rose from 2.2% in January to 8.9% in June 2025. Import growth turned negative by June, dropping from 26.4% in March to -1.4% in June. Key contributors to the rising rates were “Fentanyl tariffs” and expanded “Section 232 tariffs” on steel, aluminum, and automobiles. Rate hikes slowed from May to June as the reciprocal tariffs for some economies were temporarily suspended[para. 3][para. 4][para. 5].

Between January and July 2025, U.S. imports grew by 10.7% and exports by 4.8%, but the overall trade deficit widened by 21.3%. Only trade with China and Canada saw declines in both imports and exports, with the China-U.S. trade experiencing the largest drops. Bilateral deficits narrowed with China, Canada, South Korea, and Japan, but America’s global trade deficit grew, with the EU overtaking China as the main source. U.S. gold exports to the U.K. surged by over 200%, driving up the trade surplus with the U.K., while increased capital goods exports expanded the trade surplus with Brazil[para. 6][para. 7].

By June 2025, American trading partners faced divergent effective tariff rates: China at 37.4%, Japan at 15.3%, South Korea at 12.0%, several others in the 5–10% range, and Mexico, Canada, Switzerland, and Taiwan below 5%. Tariffs on China are the highest, resulting from several rounds of customs measures. Chinese exports like toys, textiles, and footwear were particularly hard-hit. Imports from China fell from 12.8% to 9.4% of total U.S. imports. Meanwhile, imports from Vietnam rose, as companies shifted orders due to lower tariff rates, with Vietnam’s share of U.S. toy imports jumping from 6.9% to 15.1%[para. 8][para. 9][para. 10][para. 11][para. 12].

Effective U.S. tariff rates on most product categories surged, especially for labor-intensive goods (e.g., umbrellas, toys, footwear) and items affected by Section 232 tariffs (automobiles, steel, aluminum). Section 232 tariffs on steel and aluminum were doubled in June 2025, causing tariff rates on these products to soar. Only copper and energy products saw a slight decline in effective tariff rates as certain exemptions applied[para. 13][para. 14][para. 15].

The article explains that effective tariff rates lag behind nominal rates due to: (1) substitution effects as traders shift to low-tariff goods or source from other countries, (2) exemptions provided by trade agreements and for special products, (3) in-transit exemption clauses that allow goods shipped before new tariffs to enter at old rates, and (4) the use of bonded warehouses and foreign-trade zones, delaying tariff payments. As these loopholes close, effective rates are expected to rise and align more closely with nominal rates in the future[para. 16][para. 17][para. 18][para. 19][para. 20][para. 21].