Effective Tariff Rates and Economic Uncertainty in a Rapid Policy Environment

Since President Trump’s inauguration on January 20, 2025, the average effective tariff rate has changed rapidly, sometimes in the same day, as new trade policies are announced. As of June 1, 2025, the average effective tariff rate was 15.6. Coming into February of this year, it was 2.4. However, those numbers obscure how much the tariff rate has changed day-to-day (and sometimes even multiple times within the same day) over the last few months. Figure 1 shows how often the average effective tariff rate has changed since January 20 and how wide-ranging it has been.  

The volatility in the average effective tariff rate likely has contributed to an increase in economic policy uncertainty, as seen in Figure 2. Economic policy uncertainty has regularly been higher than it was during the Covid pandemic in 2020, which reflects the uncertain operating environment.

It is still unclear how the volatility in the average effective tariff rate and economic policy uncertainty will impact economic growth, businesses, and consumers. However, it seems likely to act as an economic drag as economic participants try to figure out how to respond to an ever-changing environment.