U.S. consumers face the highest average effective tariff rates since 1934, with new levies projected to reshape household budgets and slow economic growth, according to a Yale University Budget Lab analysis released Friday. The overall rate on imported goods has surged to 18.3% as of July 2025, triggering warnings of prolonged economic strain.
Economic Ripples Across Industries
The study forecasts a 0.5 percentage point annual reduction in real GDP growth through 2026, coupled with unemployment increases of 0.3 percentage points by late 2025 and 0.7 points by 2026. Clothing and footwear sectors face immediate price spikes of 38-40%, with long-term costs expected to stabilize 17-19% above pre-tariff levels.
Household Budgets Under Pressure
Average annual household spending is projected to rise by $2,400 in 2025, disproportionately affecting lower-income families. Analysts note these figures could worsen depending on global trade responses to Thursday's executive order authorizing 10-40% tariffs on goods from 69 trading partners, effective August 7.
Global Reactions Intensify
While the White House maintains the measures protect domestic industries, international critics warn of escalating trade tensions. Market analysts observe increased volatility in U.S. equities as investors weigh the policy's long-term implications.
