Concerns over rising inflation persist, but recent figures have brought a sigh of relief for many observers, delivering results that were softer than anticipated. Yet beneath that momentary calm, a nagging question remains: When will Americans feel the full effects of higher prices triggered by new tariffs?
For years, economists predicted that effective tariffs—fuelled by trade surcharges at levels unseen since the 1930s—would drive product prices sharply upward. But so far, those dramatic surges haven’t arrived. The Wall Street Journal reported on a new study from Barclays economists that challenges earlier assumptions about the magnitude of tariffs. According to their analysis of Census Bureau data, actual payments by importers in May resulted in a weighted-average duty rate of about 9%, significantly lower than the 12% previously projected. The discrepancy stems from the fact that roughly half of the goods entering the U.S. come duty-free, avoiding steep levies imposed on imports from high-tariff countries like China.
“The real surprise in the U.S. economy’s resilience lies not in its reaction to tariffs but that the rise in the effective tariff rate has been more modest than commonly thought,” the Barclays report concluded.
Other economists have echoed this unexpected finding. JPMorgan analysts point out that surcharge rates fell even further in June, as importers shifted purchases to domestic businesses or sourced from countries with more favorable tariff rates.
Transshipment is another factor muddying the waters. This logistics practice—where goods pass through at least one intermediate destination en route to the U.S.—is often used to optimize routes or switch transportation modes. However, as customs officials warn, transshipment can also facilitate “origin washing,” whereby products are re-labeled or repackaged and accompanied by new paperwork to disguise their true provenance.
In response, the Trump administration announced in late July that intentional transshipment to avoid duties would be punished with an additional 40% penalty, according to the White House. Still, enforcement hinges on detection—a challenging task given the complexity of global supply chains.
Barclays economists expect tariff rates to climb in the coming months, particularly as authorities close loopholes that have allowed some imports to skirt duties. One such exemption—allowing tariff-free shipments of goods valued at $800 or less—was recently suspended by the White House.
Despite these moves, the outlook remains uncertain. “Tariffs are feeding through unevenly and will continue to push inflation higher in the coming months,” Oxford Economics noted in a recent briefing. Exactly how much remains up in the air.
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