Trump's incredibly volatile tariff landscape, in one chart
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It's hard to overstate how rapidly President Trump has changed the very underpinnings of U.S. trade policy since the start of February. But this chart sums it up.
Why it matters: Trump is seeking to reset America's economic relationship with the rest of the world. But he has also introduced a trade policy landscape that changes by the day.
- Tariffs with major trading partners are not only higher than in decades — they have also become far more volatile.
- There are two sets of economic risks from this new era of trade policy —one from the direct costs of higher import taxes, the other from the sense that policy could change minute-to-minute.
By the numbers: The weighted average tariff — the average import tax paid on an imported good — was 1.6% when Trump first took office in 2017. For all the attention that his first-term tariffs and some Biden-era expansion of them got, that was only up to 2.4% at the start of this year.
- Now, swings in the average tariff rate that dwarf those changes can occur within a single news cycle, according to calculations by the Yale Budget Lab shared first with Axios.
- In the last month alone, the weighted average tariff has been as low as 6.9% (after a trade court ruling that Trump overstepped his emergency authority) and as high as 28%, just before a de-escalation with China.
Between the lines: Corporate supply managers are used to adapting to changing circumstances, and can plug the details of any tariff regime into their calculations of where to source goods and how to price them.
- But the sheer unpredictability of this policy environment means it is less a one-time adjustment and more a constantly moving target.
What they're saying: "Nobody could argue that what's happened has been smooth or designed in a way for the private sector to kind of gradually adapt to it, right?" Evan Smith, chief executive of supply chain technology company Altana, tells Axios.
- To adapt, he said, "it's less about trying to price in the exact current tariff schedule into their model or their forecasts, and more trying to be ready for whatever the world has in store."
- In the meantime, he said, that could mean lots of surges and shortages in the supply of goods for months to come, even if tariff policy stabilizes from here.
The bottom line: "Many of these announcements don't last months and some don't even last days," Yale's Natasha Sarin tells Axios.
- "That uncertainty, independently of where the tariffs ultimately land, does have costs and we're already seeing them in the economy."
