Where have the tariffs gone?
15 DEC, 2025
By Enguerrand Artaz Artaz
By Enguerrand Artaz, Strategist, La Financière de l’Échiquier
After becoming a major source of tension at the beginning of the year, U.S. tariffs seem to have stopped worrying markets, which are flirting with all-time highs as the year draws to a close. If we look at the global economy as a whole, the conclusion is not very different, since the most alarmist hypotheses have not materialized: inflation has not surged, growth has not slowed sharply, and global trade has not collapsed. One could almost believe that the increase in U.S. tariffs never happened. However, a look at U.S. Treasury accounts leaves no doubt, with more than $200 billion collected between April and November 2025 – four times the roughly $50 billion collected over the same period the previous year. That is irrefutable proof that they are in force. So why do they seem to have had such little impact on the economy?
First, it should be noted that the effective tariff rate (11.5%) is still currently below the theoretical rate implied by all of the Trump administration’s announcements (around 16.5%). Beyond delays or temporary suspensions of certain levies, the explanation lies in the stockpiling of goods threatened by customs duties before they came into force. This has reduced import needs, automatically lowering the tariff rate, as the most heavily taxed products account for a smaller share of total imports. As accumulated inventories are run down, the effective rate should continue to rise. In other words, the maximum impact of the tariff increases is still to come.
The effect on the U.S. economy has also been limited by price adjustments accepted by some exporters. For example, import prices of Chinese products have fallen by 2.5% year on year, while Japanese car manufacturers initially reacted by sharply cutting prices on vehicles destined for the U.S. market. Several studies also show price declines in steel and aluminum, sectors hit by steep tariff increases. However, this initial reflex by exporters, aimed at preserving U.S. market share, appears to be reversing. Import price indices for manufactured goods from many countries are now clearly trending upward, and companies such as Toyota and Subaru have recently begun passing part of the cost on to U.S. consumers.
As for the tariffs actually collected, part of them appears to have been passed on to consumers. Evidence of this can be seen in the recent rise in goods price indices, after a slightly deflationary trend since mid-2023. The remainder has likely been absorbed by U.S. companies: on the one hand through narrowing margins (with the exception of technology), and on the other through cost adjustments, particularly in employment, where hiring freezes and initial workforce reductions are becoming visible.
Although U.S. tariffs have been absorbed across different areas of the global economy and partly have delayed effects, they appear set to weigh more heavily on the U.S. economy in the coming months – driven by a higher effective tariff rate once inventories are depleted and by rising exporter prices. Moreover, now that tariff levels have stabilized, companies that have so far been cautious may feel encouraged to pass on a larger share of cost increases to consumers. While the issue may no longer be front of mind for investors, it would be wise not to lose sight of it, especially if the Supreme Court were – against expectations – to rule in favor of the White House on the legality of reciprocal tariffs.
