President Donald Trump’s trade war is finally easing but not by enough to eliminate damage to American families and the economy at large, according to research published Monday.
Even after accounting for the US-China trade breakthrough, Trump’s 2025 tariffs will still lift prices by almost 2% in the short run, costing the typical middle-class household $2,237 per year, The Budget Lab at Yale found.
That’s down from the group’s mid-April cost estimate of $3,443 for the households near the middle of the income spectrum.
On an average basis, Trump’s 2025 tariffs will blow an even bigger hole in household budgets, costing $2,800 per year, the analysis found.
Large price increases are still expected over the short run, including for clothes (14%), computers and electronics (14%) and leather products like shoes and hand bags (15%).
US tariffs and foreign retaliation are still expected to lower real GDP growth by 0.7 percentage points this year, according to the report.
And the unemployment rate is expected to climb by 0.35 percentage points, compared with 0.5 percentage points in mid-April. That would still translate to a loss of 456,000 jobs by the end of the year.
Still, Trump’s cut to US tariffs on China are consequential, reducing the negative economic impact of all 2025 tariffs by 40%, The Budget Lab said. Less significant is the US-UK trade framework, which researchers say has “only minor impacts.”
Yet tariffs remain at high levels.
In fact, The Budget Lab estimates the average effective tariff rate stands at 17.8%, the highest since 1934. If China tariffs were not lowered, the average effective tariff rate would have stood at 27.6% – the highest since 1903.
