Working Papers

April 2026, No. 26-08

This paper analyzes the effect of the 2025 U.S. import tariffs on import prices and local labor-markets. To that end, we use highly disaggregated customs data to construct realized tariff rates from actual duty collections, rather than announced statutory schedules. An important contribution is that we document a large and persistent gap between the two measures, driven by within-country product reallocation, cross-country sourcing shifts, and implementation frictions. This implies that statutory rates are a poor proxy for the trade shock that firms actually faced. Using realized tariffs, we find that pass-through of realized tariffs into import prices was close to one hundred percent, with negligible adjustment by foreign exporters and a significant reduction in import quantities. When we examine local labor-market consequences of the increase in import tariffs, we find that counties which are more exposed to import-competing sectors experienced small declines in unemployment and that rising input costs weighed marginally on labor-force participation. Both effects, though heterogeneous across space, are economically negligible. In contrast to the 2018–2019 tariff episode, where rising input costs dominated, resulting in lower manufacturing employment, the 2025 tariffs did not generate large labor-market changes in either direction.

DOI: https://doi.org/10.21144/wp26-08