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What Trump's sweeping new tariffs mean for your wallet
Shows Good Morning America ShopGMA Interest Successfully Added We'll notify you here with news about Turn on desktop notifications for breaking stories about interest? Off On Stream on What Trump's sweeping new tariffs mean for your wallet Trump's levies on more than 80 countries took effect on Friday.
President Donald Trump's new round of sweeping tariffs on more than 80 countries took effect on Friday, ratcheting up an effort to reconstruct levies struck down by the Supreme Court earlier this year.
Targeted nations face duties of either 10% or 12.5%, depending on the extent of their efforts to address alleged forced labor violations, according to a notice from U.S. Trade Representative Jamieson Greer's office.
The levies began on the same day that a 10% global tariff announced in February was set to expire.
The move risks elevated costs for some household goods and a jolt of economic uncertainty at a time when shoppers and businesses are weathering a bout of resurgent inflation, some analysts said. Still, they added, the policy puts a major swathe of tariffs on new legal footing and may boost federal tax revenue.
Here's what Trump's sweeping new tariffs mean for your wallet and the wider economy:
Importers typically offset the tax burden of tariffs in the form of higher prices for shoppers. The new levy, as a result, threatens to strain household budgets at a time when the Iran war is already pushing up prices .
Prior to the shift in policy last week, the average tariff rate stood at 11.4%, the Yale Budget Lab (YBL) said. After the levies on Friday replaced the temporary across-the-board tariff, the average tariff rate fell slightly to 11.1%.
The average tariff rate is set to rise to 11.8% by the end of 2026 as a result of additional proposed tariffs, however, YBL said.
Trading partners affected by the new round of tariffs account for about 99% of all U.S. imports, but a series of product exemptions will significantly ease the measure's impact, investment bank Macquarie previously told ABC News.
The tariffs include exemptions for some food items, fuel, fertilizers and other products, as well as goods compliant with the United States-Mexico-Canada Agreement, or USMCA, a free trade agreement.
Jim Reid, a research strategist at Deutsche Bank, acknowledged the fresh round of tariffs in a note shared with ABC News on Friday, even as he downplayed the potential economic impact. Trump, after all, moved forward with a far-reaching tariff of around 10% at the same time he lifted a global tariff that matched that rate.
"Perhaps the most important takeaway is how little changes economically," Reid said. "The announcement is less about raising tariff rates and more about preserving them."
In the event that Trump's tariffs stay on the books over the next 10 years, the additional taxes could deliver as much as $900 billion in extra revenue for the federal government, Committee for a Responsible Federal Budget (CRFB) said.
The added tax payments amount to less than 60% of expected revenue under the batch of levies struck down by the Supreme Court, CRFB said. Even so, the group said, the additional funds could help incrementally reduce the national debt, putting it on a trajectory to be 122% of the U.S. GDP in 2036, rather than 125%.
The tariffs resemble an across-the-board 10% levy that expired on Friday, but the new measure falls under a separate legal authority with the potential for greater staying power than the levies that were struck down by the Supreme Court, some analysts said.
The finding centered on forced labor policies followed an investigation initiated by the Trump administration under Section 301 of the Trade Act of 1974, which permits levies imposed in response to an adverse trade policy taken up by another country.
Seventeen trade partners will now have a 10% tariff, including Argentina and Bangladesh. The Trump administration says these countries have made commitments to adopt, and effectively enforce, forced labor import prohibitions. Products from the 27-nation European Union and Taiwan will also have a 10% tariff.
All other trading partners, from 41 countries, have failed to adopt a forced labor import prohibition and will have a 12.5% tariff rate, the Trump administration says.
Reid, of Deutsche Bank, said Section 301 "provides a considerably more robust foundation than the temporary emergency powers used previously."
"While Section 301 tariffs are not permanent and remain subject to review processes and potential legal challenges, they are generally viewed as far more resilient than the framework struck down by the courts earlier this year," Reid added.
Some analysts disagree. Alan Wolff, a former deputy director-general of the World Trade Organization, said in a blog post in June that he expected far-reaching Section 301 tariffs to fail under legal scrutiny. Under Section 301, Wolff said, lawmakers intended to give the president the authority to address one country at a time rather than issue a blanket tariff.
"There is no indication that the Congress meant 'one or more, or multiple foreign countries,' to be addressed all at once," Wolff said.
The levy that took effect on Friday comes after a flurry of country-specific tariffs put forward in recent days.
On July 20, Trump issued a 50% tariff on a set of goods from Canada, including hockey sticks and wine. A day later, Trump announced a 100% tariff on generic drugmakers that would take effect in 2028.
A 25% levy hit some Brazilian goods on July 22, including apparel and farm machinery.
"Tariffs are increasingly becoming a permanent feature of U.S. economic policy," Reid said.
ABC News' Isabella Murray contributed to this report.
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