A new study finds Trump’s 2025 tariffs had little effect on US economic growth but generated significant revenue and accelerated trade decoupling from China.
WASHINGTON: A new academic paper analysing the short-run impact of former US President Donald Trump’s 2025 tariff barrage has found a minimal effect on overall economic output.
The study, published by the Brookings Institution, concluded the tariffs’ net welfare impact on the US economy ranged from adding 0.1% of GDP to subtracting 0.13%.
The research was conducted by economists Pablo Fajgelbaum from UCLA and Amit Khandelwal from Yale University.
It found the minimal impact on real consumption masked large gross transfers from consumers to producers.
This distortion was largely offset by higher federal revenues and wage gains in some industries, however.
Revenue from the tariffs collected in 2025 totalled USD 264 billion.
This accounted for about 4.5% of total federal receipts, compared to an average of about 1.6% over the past decade.
The paper noted that pass-through of the tariffs to higher prices for US buyers was high, at 80% to 100%.
In a baseline scenario, the researchers estimated this at 90%, meaning foreign exporters bore only 10% of the higher cost.
While average US tariff rates rose to a 80-year high of 9.6% from 2.4%, the applied rates are lower.
This is because about 57% of US imports still enter duty-free due to existing trade agreements and exemptions.
The research also tracked a continued decoupling in US-China trade flows.
China’s share of US imports fell to just 7% in December 2025, down from a 23% share in December 2017.
The paper noted that many of these imports have simply shifted to other countries, however.
It found no evidence that the tariffs increased “friend-shoring” of supply chains to US-allied nations.
The study also found no proof the measures increased US manufacturing employment or reduced the overall US trade deficit.
Any benefits from the Trump administration’s recent trade agreements aimed at opening foreign markets remain to be seen, the authors concluded.
The Sun Malaysia
