Trump's tariffs have little impact on the economy - Academic study: Increased revenue in the US federal budget
President Donald Trump's barrage of trade tariffs last year had only a minimal impact on U.S. economic output, but it raised significant federal revenue and contributed to a further U.S.-China trade decoupling, a new academic paper from the Brookings Institution showed.
The study, which analyzes the short-term impact of Trump's tariffs, found that their "net welfare impact" on the US economy ranged from adding 0.1% to GDP to subtracting 0.13%, depending on assumptions about changing terms of trade, including the extent to which demand shifts toward domestically produced goods.
The minimal impact on real consumption masks large gross transfers from consumers to producers, but this distortion is largely offset by higher federal revenues and wage increases in some industries.
Tariffs rose to an 80-year high of 9.6% from 2.4%, but applied tariffs are lower and affect only a small portion of GDP. According to the study, about 57% of U.S. imports still enter duty-free, due to the U.S.-Mexico-Canada trade agreement and tariff exemptions for energy and certain electronics imports.
Revenue from tariffs collected in 2025 totaled $264 billion, accounting for about 4.5% of the total, compared to about 1.6% over the previous decade.
China's share of U.S. imports fell to just 7% in December 2025, from 23% in December 2017, before Trump imposed punitive tariffs on Chinese goods during his first term. But many of those imports have shifted to other countries.
The document finds no evidence that the tariffs have increased "partner support" of supply chains for U.S. allied countries, that they have increased manufacturing employment, or reduced the country's overall trade deficit.
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