‘Not as high as announced’: Top economists explain why Trump’s tariffs didn’t fully bite

Despite headline-grabbing tariff announcements under US president Donald Trump’s administration, the actual impact on prices, trade flows and domestic industry has been more subdued than widely feared, according to a new working paper by economists Gita Gopinath and Brent Neiman.

The study, titled “The Incidence of Tariffs: Prices and Reality,” indicates that legal tariff rates imposed on American imports have risen dramatically to levels not seen in the country for more than a hundred years. At the end of September 2025, the trade-weighted average tariff rate was 27 percent. “Imports from 176 sources, on goods representing more than 70 percent of total U.S. imports, faced higher tariffs than at the end of 2024.”

However, according to the newspaper, the tariffs actually applied were much lower. “As of the end of September 2025, the effective tariff rate was only about half the statutory rate,” the document notes. “Delayed shipments, product and company-specific exemptions, use of the United States-Mexico-Canada Agreement (USMCA), evasion and inconsistent enforcement all contribute to the large gap between statutory and actual rates.”

One of the main reasons the impact of tariffs on prices remains smaller than many forecasts made in April is that the implemented policy remains much smaller than the announced policy, the economists noted in the paper, adding that shipment delays will dissipate over time, but other contributors to the actual legal gap may persist or expand going forward.

Gopinath served as First Deputy Managing Director of the International Monetary Fund from January 2022 to August 2025, while Neiman is a professor at the University of Chicago.

The research’s second major finding is that when tariffs are combined, their costs are largely borne by US importers and consumers, not foreign exporters.

Neiman and Gopinath found that the transmission of tariffs to U.S. import prices was nearly complete—nearly 94% in the last episode and about 80% in earlier episodes in 2018-19. This means that instead of foreign suppliers absorbing some of the fees, price increases are reflected almost entirely in the final cost to American companies and buyers.

“The 2025 tariff shock is not yet as large as policy announcements suggest, but its costs are largely borne by the United States, as exporters, on average, have not reduced their prices,” the document said.

In November last year, Sajid Chinoy, chief economist for India and head of Asian economics at JP Morgan, said that the actual implementation of the tariffs in the United States had turned out to be much less effective than initially expected. Speaking to Govindraj Ethiraj on The Core, Chinoy said the doomsday predictions made earlier in the year did not come true because both the imposition of tariffs and the global economic backdrop have shifted in unexpected ways.

Chinoy pointed to two main factors behind the stronger-than-expected global growth. The first was the actual tariff route. “On liberalization day, the US president said the actual tariffs would be close to 26%, which is a massive increase from 3% in 2024. And if you actually see what happened several months later, the actual tariffs are close to 17%,” he added, noting that multiple exemptions – including electronics, semiconductors and pharmaceuticals – held down the real rise. “So the actual tariff is about 10 percentage points lower.”

But he said this is the calculated tariff that economists calculate in a spreadsheet. “The effective tariff in the United States today is about 10%. And when you look at the revenue it collects from imports (tariff revenue) and you divide that by the number of imports, it’s about 10%. So the movement was much less sharp. It went from 3 to 10, not from 3 to 25 or 3 to 17.”