US Effective Tariff Rate Reaches 10.5% — Highest Since 1940s

According to data compiled by the Yale Budget Lab and confirmed by U.S. Customs and Border Protection records, the U.S. effective tariff rate — calculated as total customs duties collected divided by total import value — reached 10.5% in January 2026. This represents a more than fourfold increase from the 2.3% rate that prevailed throughout most of the 2010s and early 2020s, and places the United States at its highest effective tariff level since the Smoot-Hawley era of the 1940s.

The escalation occurred in distinct waves. The initial Section 301 tariffs on Chinese goods in 2018-2019 pushed the rate to approximately 3%. The 2025 executive actions under IEEPA, combined with expanded Section 232 tariffs on steel, aluminum, and automotive imports, drove the rate above 8%. The February 2026 Section 122 temporary import surcharge added the final increment, pushing the aggregate rate to 10.5% across all imported goods.

The sectoral impact varies dramatically. Consumer electronics face effective rates of 20-25% due to the concentration of Chinese-origin components. Apparel and textiles range from 15-30% depending on country of origin. Industrial machinery and capital equipment, much of which comes from allied nations, faces rates of 8-12%. Agricultural imports, partially shielded by trade agreements, average around 5-7%.

For businesses, the cost implications extend beyond the tariff itself. Compliance costs — including classification, documentation, origin verification, and audit preparation — have increased by an estimated 40% since 2024. Companies that previously treated customs duties as a minor line item now face material impacts on gross margins, requiring CFOs and supply chain leaders to integrate tariff exposure into strategic planning.

Economists at the Peterson Institute for International Economics estimate that the elevated tariff rate adds approximately $1,300 per year in costs to the average American household. Whether this burden is absorbed by importers, passed through to consumers, or mitigated through supply chain restructuring depends heavily on the competitive dynamics of each industry.