WASHINGTON, March 25 – A new academic study from the Brookings Institution reveals that President Donald Trump’s extensive tariff policies implemented last year generated substantial federal revenue while producing minimal effects on the nation’s overall economic performance, according to research published Wednesday.
The analysis examining the immediate effects of Trump’s tariff strategy determined that the “net welfare impact” on the American economy ranged from a positive 0.1% of GDP to a negative 0.13% of GDP, with variations depending on trade term assumptions and the degree to which consumer demand shifted toward American-made products.
University of California-Los Angeles economist Pablo Fajgelbaum and Yale University economist Amit Khandelwal conducted the research and identified several significant findings:
The study found that while real consumption showed little change, substantial transfers occurred from consumers to producers, though this economic distortion was largely balanced by increased federal revenues and salary improvements in certain sectors.
The research demonstrated that tariff costs were passed along to consumers at rates between 80% and 100%. Using a baseline estimate of 90%, researchers calculated that foreign exporters absorbed only 10% of the additional tariff expenses.
Tariff rates climbed to 9.6% – the highest level in eight decades – compared to the previous 2.4%. However, actual applied rates remain lower and affect only a small fraction of GDP. The study noted that approximately 57% of American imports continue to enter without duties due to the U.S.-Mexico-Canada trade agreement and exemptions for energy and specific electronics.
Tariff collections in 2025 reached $264 billion, representing about 4.5% of total federal receipts – a significant increase from the roughly 1.6% average over the previous ten years.
China’s portion of U.S. imports dropped dramatically to just 7% in December 2025, down from 23% in December 2017, before Trump implemented punitive measures on Chinese products during his initial presidency. However, much of this import volume has relocated to other nations.
The research found no evidence that tariffs have promoted “friend-shoring” of supply chains to allied nations, increased American manufacturing jobs, or reduced the overall trade deficit. The potential benefits from the Trump administration’s recent trade deals designed to expand foreign market access for U.S. exports have yet to materialize.
