Key Points
- The average U.S. import tax hit 17% in November, the highest since 1935. Tariffs raised over $236 billion for the U.S. Treasury this year.
- China fell to the United States’ third-largest trading partner as imports declined by 25%.
- The U.S. trade deficit shrank significantly by September after hitting a record high in March.
- Stock market volatility peaked in April following the announcement of aggressive tariffs.
President Trump’s return to the White House has completely reversed decades of American trade policy. By imposing high tariffs on almost everything entering the country, he has built a massive wall of tariffs. While this strategy brought billions of dollars into the U.S. Treasury, it also created a bumpy ride for families and businesses facing higher prices. The year 2025 will likely go down as one of the most unpredictable economic periods in modern history.
One of the most telling numbers is the “effective” tariff rate. This is the average tax actually paid on goods entering the country. By November, this rate hit nearly 17%. To put that in perspective, it is seven times higher than it was in January. In fact, the U.S. has not experienced import tariffs this high since the Great Depression of 1935.
Trump repeatedly promised that these tariffs would fund the government and fix the trade deficit. So far, the results are mixed. The government collected more than $236 billion from these taxes through November. While that is a substantial increase over previous years, it is nowhere near sufficient to replace federal income taxes, as the President once suggested.
Regarding the trade gap, the deficit narrowed significantly by September. This occurred partly because the initial panic to buy foreign goods before the taxes took effect finally subsided. Nevertheless, the total deficit for the year remains higher than in 2024.
The most significant shift occurred with America’s trading partners. China, which was previously the leading source of U.S. imports, has fallen to third place behind Canada and Mexico. With U.S. tariffs on Chinese goods hitting 47.5%, imports from China fell by 25% this year.
Meanwhile, countries such as Mexico, Vietnam, and Taiwan are seeing their trade with the U.S. grow as companies seek ways to avoid the highest taxes.
For investors, the tariff news caused constant whiplash. The stock market experienced its largest daily and weekly swings in April, coinciding with the implementation of many of these trade policies. Each time the President announced a change or a suspension, the S&P 500 responded with significant volatility.
