US imposes 10%-12.5% tariffs on 60 economies, pushing average rate to 12.8%

The US Trade Representative imposed new tariffs of 10% to 12.5% on about 60 trading partners Thursday, replacing a temporary 10% global duty that expired at midnight and pushing America's average tariff rate to 12.8%, the highest since World War II.

"The United States has had a forced labor import ban for nearly a century, and rigorously enforces it; it's well past time for our trading partners to do the same," US Trade Representative Jamieson Greer said in announcing the duties.

The new levies, effective 12:01 am Eastern Time Friday, cover roughly 99.4% of all US imports, according to a USTR fact sheet. Countries that have implemented forced labor prohibitions — including Canada, the European Union, the United Kingdom and India — face the lower 10% rate. China and Japan were assigned the higher 12.5% tier. Goods already subject to separate Section 232 national security tariffs on steel, aluminum, copper and automobiles are excluded, as are energy products, fertilizer, certain food items and trade under the US-Mexico-Canada Agreement.

The tariffs represent the Trump administration's latest effort to reconstruct its trade barrier regime after the Supreme Court struck down earlier emergency-powers duties in February, forcing the return of about $81 billion in collected revenue. The administration had used Section 122 of the Trade Act of 1974 for a stopgap 10% global tariff that bought time for investigations under Section 301, which now underpins the new measures. The Yale Budget Lab estimates the current tariffs will cost the average US household an additional $1,100 per year, with lower-income households hit hardest because they spend a larger share of income on necessities like food and clothing.

Tariff Revenue Falls Short of Promises

Trump has repeatedly said tariffs would generate trillions of dollars in revenue, at one point suggesting $2,000 refund checks for every American. Government data tells a different story: tariff revenue reached roughly $195 billion in fiscal year 2025 and about $163 billion during the first nine months of fiscal year 2026 through June. After the Supreme Court ruling forced refunds, the government returned about $26 billion more in tariffs than it collected in June alone. Over 10 years, the Yale Budget Lab projects tariffs could raise roughly $1.9 trillion if left in place — far below the trillions the president has touted.

Manufacturing Jobs Decline Despite Promises

Trump has argued that universal tariffs would encourage companies to retain American workers and expand domestic manufacturing. Since he returned to the White House in January, the number of US manufacturing jobs has dropped by 75,000, while construction spending on manufacturing projects has fallen 26%. The previous time the US tariff rate approached current levels — after the Smoot-Hawley Tariff Act of 1930 pushed rates above 20% — global trade contracted by roughly 66% over four years, according to historical data from the US Census Bureau.

India's Forced-Labor Ban Helps Secure Lower Rate

India's inclusion in the 10% category followed its July 15 amendment to the Foreign Trade Policy, empowering the government to prohibit imports of goods produced using forced labor. New Delhi adopted the International Labour Organization's definition of forced labor, which helped address concerns at the center of the US review. The development comes as India and the US near completion of an interim trade agreement, which the State Department described Wednesday as "almost complete" after talks between External Affairs Minister S Jaishankar and Secretary of State Marco Rubio in Manila.

Separate Threats Loom for Indian Pharma

Indian pharmaceutical exporters face a potentially bigger challenge. Trump has announced a phased tariff plan for imported generic drugs, with duties remaining at zero for two years from August 1 before rising to 100% for one year and then 200% thereafter. India supplies nearly 30% of generic drugs globally, making it particularly exposed to the policy, which aims to force pharmaceutical companies to shift production to the US.

The US is also separately investigating 16 economies over concerns about excess industrial capacity, which could lead to additional tariffs. Spot gold fell 1.96% to $4,049 Thursday, suggesting a liquidity crunch or margin-call scenario as the tariff escalation ripples through commodity markets.

This article is for informational purposes only and does not constitute investment advice.