The U.S. effective tariff rate will rise to 19.4% from 14.1% if the so-called “reciprocal” tariffs and new charges on copper take effect as expected on Aug. 1, Fitch Ratings says.
In a new report, the rating agency said its interactive tool for tracking U.S. tariffs projects that the effective rate will jump based on the latest reciprocal rates announced by the U.S. administration. If additional 25% tariffs on semiconductors and pharmaceuticals also take effect, the effective rate would climb to about 23.7% from 19.4%, it noted.
“The threatened tariff increases represent a significant increase from existing tariffs,” it said.
For Canada, the effective tariff rate is projected to rise to 11.7% from 7.5% if the newly announced 35% levy is imposed, along with the 50% tariff on copper imports.
Similarly, the effective rate on Mexico will climb to 13.1% from 9.5%, Fitch said.
These projections assume about half of existing duty-free imports will ultimately be reclassified as compliant with the USMCA trade deal, Fitch noted.
In Europe, effective rates on countries would range from 12% to 30%, as tariffs on European Union imports rise from 20% to 30%, it said.
“For now, the U.S. maintains a 10% baseline tariff for most countries that have not received letters, although Trump stated he may set a blanket tariff of 10% to 15% for around 150 countries. This presents additional upside risk to current [effective tariff] levels,” it noted.