A recent study by Yale University reveals that American consumers are currently facing the highest average tariff rates since 1934. In 2025, the average effective tariff rate has climbed to 18.3%. Even after accounting for shifts in consumer behavior, the rate remains historically high at 17.3%. These elevated tariffs have been driven by new trade policies, including reciprocal tariffs and retaliatory measures from other countries.

The impact on household finances is significant. The overall price level in the U.S. has risen by 1.8% in the short term due to these tariffs, which translates to an average annual income loss of $2,400 per household in 2025 dollars. Households in the lowest income brackets are especially affected, with annual pre-adjustment losses estimated at $1,300. If consumers adapt by substituting away from more expensive goods, the average per household loss could still amount to $2,000.

Certain product categories are being hit much harder than others. Clothing and textiles stand out, with consumers facing price increases of 40% for shoes and 38% for apparel in the short term. Even over the longer term, these price hikes persist, with prices for shoes and apparel remaining 19% and 17% higher than before the tariffs were imposed.

This wave of high tariffs not only raises household expenses, but also poses broader risks for the U.S. economy. Lower income households are disproportionately affected, and the pressure on consumer budgets could ultimately slow economic growth. As trade tensions remain high and new tariffs continue to be introduced, American consumers and businesses face an increasingly challenging environment. Keeping a close eye on tariff developments and adapting spending habits will be crucial for navigating these historic changes in the marketplace.