Key Points

• As of May 2026, the average effective tariff rate stood at 7.2 percent. The decline in recent months follows the Supreme Court’s February 20, 2026 declaration that the IEEPA tariffs were unconstitutional.
• Effective tariff rates vary dramatically by trade partner and product. Among major trading partners, China faces the highest effective tariff rate of 23.4 percent, although this is a marked decline from previous months. The share of imports from Canada and Mexico claiming an exemption under USMCA stood at 83.8 percent in May. Steel and aluminum products remain the most heavily tariffed product category at 41.2 percent, followed by automotive vehicles at 13.5 percent.

How Have Effective Tariff Rates Changed Over Time?

The Trump administration’s tariff policies have resulted in substantial increases in effective tariff rates. In January 2025, the average effective tariff rate was 2.3 percent. As of May 2026, it stood at 7.2 percent. The decline in recent months follows the Supreme Court’s February 20, 2026 declaration that the IEEPA tariffs were unconstitutional.

Figure 1 shows the evolution of aggregate effective tariff rates since February 2025. The chart compares the observed average effective tariff rate in customs data with a counterfactual that assumes imports would have followed historical trends, which we refer to as the “pre-substitution” rates. The gap between these lines reveals the impact of behavioral responses as importers adjust their purchasing patterns in response to tariff changes. The drop in both series in March reflects the repeal of the IEEPA tariffs in late February and their replacement with a 10 percent global tariff under Section 122.

Among major trading partners, China faces the highest effective rate of 23.4 percent in May 2026. By major product category, steel and aluminum products face the highest effective tariff rates at 41.2 percent, reflecting both existing Section 232 tariffs and rate increases in June 2025, from 25 percent to 50 percent.

How Did Changes in Import Behavior Affect Customs Revenue?

We estimate that new tariffs raised $268.8 billion in gross customs revenue between January 2025 and May 2026, before accounting for refunds following the IEEPA ruling. If importers had not accelerated purchases or changed their purchasing patterns, gross tariff revenue would have further increased by $57.9 billion over this period. Tariffs collected under the IEEPA authority prior to their removal totaled approximately $166 billion.¹ Netting out those refunds leaves roughly $102.8 billion in net customs revenue raised by new tariffs since January 2025, assuming that all IEEPA tariff collections will be refunded.²

Treasury data for May 2026 indicate significant refunds are being disbursed. Net customs receipts fell to roughly zero in May (-$0.04 billion) as refunds offset gross collections. We estimate Treasury paid roughly $21 billion in IEEPA-attributable refunds in May, the first month with significant disbursements.³

How Have North American Partners Responded to Tariff Hikes?

Tariff hikes in 2025 have driven a surge in the share of Canadian and Mexican imports that claim exemption from tariffs under the United States-Mexico-Canada Agreement (USMCA). Figure 4 shows that the share of imports from Canada and Mexico claiming an exemption under USMCA remained stable through late 2024. This share has sharply increased for both countries since early 2025, standing at 83.8 percent in aggregate as of May 2026. This surge reflects importers aggressively leveraging USMCA rules of origin to secure duty-free status and avoid higher tariff rates.

Source: Penn Wharton Budget Model calculations based on data from U.S. International Trade Commission (USITC) DataWeb and U.S. Customs and Border Protection (CBP) Trade Statistics

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Footnotes

1. Declaration of Brandon Lord, Atmus Filtration, Inc. v. United States, No. 26-01259, ECF No. 31, para 12 (Ct. Int’l Trade Mar. 6, 2026). ↩

2. This does not include indirect effects on other revenue sources such as income and payroll taxes. ↩

3. For details, see Monthly Treasury Statement, May 2026, Table 4 (Receipts of the U.S. Government), Customs Duties line. U.S. Department of the Treasury, Bureau of the Fiscal Service. https://fiscaldata.treasury.gov/static-data/published-reports/mts/MonthlyTreasuryStatement_202605.pdf ↩