President Donald Trump recently made significant changes to U.S. trade policies that could have enduring implications for the economy and individual finances. He introduced a 10% basic tariff and extra import taxes to be applied on a country-specific basis. These broad tariffs, in addition to the existing tariffs on steel, aluminum, and automobiles, are intended to bring manufacturing and business investments back to the U.S. and generate revenue for the government.

To put the impact of these changes into perspective, three graphs have been included to illustrate the new tariff regulations.

The effective tariff rate, which calculates the total taxes imposed on imports to consider all tariff policies a nation has, was at 2.4% when Trump started his term. Economists predict this rate will rise to around 20% to 30% or beyond 22% with the introduction of the new tariffs, marking the highest rate since 1909.

Economists generally agree that tariffs are likely to raise prices on goods for average consumers. Importers often transfer the extra costs of higher taxes to customers, with estimates suggesting that tariffs could add up to $3,800 per year for the average household. Certain items, such as leather goods and clothing, are expected to see more significant price hikes.

Aside from price hikes, the tariffs could also hinder economic growth and potentially trigger a recession. While Trump anticipates short-term challenges as the global economy adapts to his policies, economists foresee longer-term consequences. According to the Budget Lab, the impacts of tariffs could persist, weighing on the country's GDP for years to come.