According to research conducted by The Budget Lab (TBL) at Yale University, if all existing US tariffs remain in place indefinitely, consumers in the US will experience an average effective tariff rate of 17.4 percent—the highest level since 1935. Conversely, if the tariffs imposed under the International Emergency Economic Powers Act (IEEPA) are rescinded, consumers would see an overall effective tariff rate of 6.8 percent, which would be the highest since 1969. Even after accounting for shifting consumption patterns, the average tariff rate would still remain at 6.8 percent.
In the baseline scenario, consumers are projected to face significant price increases in specific categories, particularly leather goods and clothing, in the short term. Prices for leather products, including shoes and handbags, are expected to rise by 37.3 percent, while apparel prices will increase by 36.2 percent and textiles by 22 percent. In the long term, after adjusting for substitution and changes in global supply, prices will still be approximately 13.2 percent higher for leather products, 12.8 percent higher for apparel, and 8.2 percent higher for textiles. This situation underscores the impact of US tariffs on consumers, highlighting how certain sectors will suffer the most.
Over the 2026 to 2035 period, the tariffs currently in effect are anticipated to generate approximately $2.4 trillion in revenue under the baseline scenario. In contrast, abolishing the IEEPA tariffs would result in about $704 billion in revenue during the same timeframe.
Furthermore, the overall price level resulting from the tariffs implemented in 2025 is expected to rise by 1.7 percent, equating to an average income loss of $2,300 per household in 2025 dollars. If the IEEPA tariffs were invalidated, the price level would increase by only 0.5 percent, leading to an average household income loss of $700.
In terms of economic growth, the baseline scenario predicts that US real gross domestic product (GDP) growth will be reduced by 0.5 percentage points each year in 2025 and 2026 due to these tariffs. This could result in the US economy being consistently 0.4 percent smaller over the long term, equivalent to an annual loss of $120 billion in 2024 dollars. Meanwhile, in the scenario where IEEPA tariffs are invalidated, the GDP growth would also decline by 0.5 percentage points each year for the same period, but the long-term impact would be a persistent reduction of only 0.1 percent, roughly translating to $25 billion annually in 2024 dollars, as reported in a TBL release.
Regarding unemployment, the baseline scenario predicts an increase of 0.28 percentage points by the end of 2025 and 0.65 percentage points by the end of 2026. This would correspond to a decrease of 480,000 jobs by the end of 2025. In the case of repealing the IEEPA tariffs, unemployment would see a rise of 0.3 percentage points by the end of 2025 and 0.5 percentage points by the end of 2026, also resulting in 480,000 fewer jobs by the end of 2025. Overall, the impact of US tariffs on consumers is significant, affecting pricing, employment, and overall economic growth in various sectors.
