Though inflation has remained relatively stable thus far in 2025, projections estimate that inflation in the United States will increase in 2026 from 2.7 percent to 3 percent.

Fact of the Week: Inflation Is Expected to Rise to 3 Percent in the United States in 2026

Throughout 2025, U.S. businesses and consumers have borne the largest share of the tariff incidence, or burden, while tariffs had relatively minimal impacts on foreign exporters.

Fact of the Week: Through November 2025, U.S. Consumers and Businesses Bore 86 Percent of the Economic Burden From Tariffs

The United States imposed six sets of tariffs in 2018, levying taxes on $303 billion worth of U.S. imports, which drove other nations to impose tariffs on $121 billion worth of U.S. exports. New analysis of U.S. trade through November 2018 found that nearly all the value of tariffs was passed through to U.S. companies and consumers in the form of domestic price increases.

Fact of the Week: Tariff Increases Through November 2018 Redirected $165 Billion in Trade on an Annualized Basis, Reducing Overall U.S. Welfare by $16.8 Billion

In the World Trade Organization’s (WTO) “Global Trade Outlook and Statistics Report for 2025,” the WTO predicts that global merchandise trade will decline by 0.2 percentage points.

Fact of the Week: World Merchandise Trade Is Projected To Fall by 0.2 Percent in 2025

The United States imposed tariffs on $290 billion of imports in 2018 and 2019, with an average tariff increase of 24 percent. A new study has quantified the impact of this on the U.S. economy, finding that firms facing increased import costs accounted for 84 percent of U.S. exports in those years and 65 percent of U.S. manufacturing employment.

Fact of the Week: New US Import Tariffs Have Cost Affected Firms an Average of $900 Per Worker

Prior to last week’s progress toward an interim trade deal with China, the United States had repeatedly delayed the expansion of tariffs on Chinese goods to most finished products. This was out of concern that such an escalation would hit U.S. consumers harder than existing tariffs on the intermediate goods that serve as inputs for companies to make their final products.

Fact of the Week: A 10 Percent Reduction in Tariffs on Intermediate Goods Increases Productivity Growth by 1.9 Percent, an Impact 6.5 Times Greater Than the Same Reduction on Final Goods

The ICE U.S. Dollar Index, which measures the value of the dollar against a basket of other global currencies, increased 19.6 percent over the last 12 months and is at its highest level since May 2002. 

Fact of the Week: The US Dollar Is Up Almost 20% Relative to Other Major Currencies Over the Last Year

That tariffs put a damper on R&D investments is straightforward: Firms absorb some of the increased input costs, reducing profits and thus the funds available to invest. But tariffs also undercut R&D at a much deeper level. By reducing the exposure firms face to foreign markets, tariffs limit the potential gains from innovation, thereby lowering the returns from investing in R&D.

Fact of the Week: Tariffs Would Reduce R&D Investment Returns in High-Tech Manufacturing by Up to 50 Percent

After falling from its peak of 5.7 percent in 2006 to 3.6 percent in 2019, the United States’ manufacturing trade deficit as a share of its GDP has risen to 5.3 percent in 2022 through June, its highest level since 2008 (5.5 percent).

Fact of the Week: A 10 Percent Increase in the Effective U.S. Tariff Rate Could Lead to an Inflation Increase of up to 1.2 Percent

Related

Fact of the Week: Inflation Is Expected to Rise to 3 Percent in the United States in 2026

Fact of the Week: Through November 2025, U.S. Consumers and Businesses Bore 86 Percent of the Economic Burden From Tariffs

Fact of the Week: Tariff Increases Through November 2018 Redirected $165 Billion in Trade on an Annualized Basis, Reducing Overall U.S. Welfare by $16.8 Billion