As America wraps up the first half of 2025, one of the most heated economic and political questions is whether tariffs brought higher prices? What do economists say?
The answer, according to a large breadth of economic research and data, is a resounding yes—tariffs have raised prices for consumers with a multitude of impacts on households, business, and the economy overall.
Tariffs and Consumer Prices: Evidence so Far
Economists who have studied the effects of the 2025 US tariff increases find that tariffs have had a direct impact in increasing prices to consumers. Yale’s Budget Lab estimates that the average effective rate of tariff is now at 15.8 percent— the highest it has been since the 1930s— based on their research, the 2025 US tariffs have collectively raised the overall price level by 1.5% in the short term.
This equates to an average household estimated income loss of $2,000 this year. Even after consumers have adjusted for changes in spending, prices are still elevated compared to before the tariffs and remain 1.3% higher, costing households approximately $1,700 per household.
Some sectors are seeing especially severe impacts. The clothing and textile industry has seen short-run price increases of 28 – 33%, while shoes and apparel prices are projected in the long-run to be 15 – 18% higher. The impact is most prominent for lower income families, who spend almost double the amount, as a share of their total income, on affected goods.
More Declining Economic Costs
Increases in prices due to tariffs are not limited to only consumer goods. Increased input costs for businesses—many of which use imported inputs—have also increased prices of durable goods and appliances. The Department of Commerce also expanded the steel and aluminum tariffs to include household appliances, adding to these cost pressures.
The Penn Wharton Budget Model at the University of Pennsylvania estimates that the most recent tariffs will reduce U.S. GDP by approximately 6% in the long run and reduce wages by 5%. For a typical middle-class household, a $22,000 lifetime loss is estimated. These reductions are larger than those associated with raising corporate taxes by a not inconsequential amount. This indicates that tariffs have a wider and longer impact on economic costs.
Impacts on the Labor Market and GDP
Economists have also pointed out that tariffs have contributed to reduced economic growth and higher unemployment. The combination of U.S. tariffs and retaliation abroad is expected to reduce real GDP growth by and expected reduction of approximately 0.6 – 0.7 percentage points in 2025 which will likely also lead to an increase in U.S. unemployment of approximately 0.3 – 0.4 percentage points. Payroll employment is projected to end the year hundreds of thousands lower, with the negative impacts concentrated in those sectors of the economy exposed to international trade.
What Do Economists Think?
The consensus of economists is that tariffs act as a tax on imports with the effect of raising costs to both businesses and consumers. Tariffs do provide short term protection to certain industries, but they systemically reduce the economy’s efficiency, lower productivity, and diminish the economy. As stated in the Deloitte 2025 forecast, increased tariffs and raised interest rates are slowing down business investment and spending on durable goods and will have repercussions on the supply chain and international competitiveness for exports.
In conclusion, the answer to “Did tariffs raise prices? What do economists say?” is a resounding yes: tariffs raised prices, decreased consumer purchasing power, and slowed economic growth. Again, the 2025 data proves that an increase in tariffs or tariffs does not just cost foreign exporters, it costs American consumers, workers, and businesses.
