Trump’s Tariffs Boosted Revenue, Shifted Trade From China With Little Impact on US Output: Study

The study found that higher import prices imposed costs on consumers and businesses, but losses were offset by increased government revenue and wage gains.

President Donald Trump holds a chart as he delivers remarks on reciprocal tariffs during his "Liberation Day" event in the Rose Garden at the White House on April 2, 2025. Brendan Smialowski /AFP via Getty Images

A new study finds that U.S. President Donald Trump’s tariff policies have generated substantial federal revenue and accelerated a shift away from Chinese imports while having only a minimal overall effect on U.S. economic output.

The paper, released on March 25 by the Brookings Institution, analyzed the short-run impact of tariffs imposed in 2025, chiefly the reciprocal tariffs Trump first announced on April 2 of that year, a date he referred to as Liberation Day.

“For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike,” Trump said when announcing his new tariff policies, which included a 10 percent baseline levy on nearly all imports, plus higher tariffs of varying degrees meant to penalize countries for their trade barriers.

The Brookings study estimates that the net impact of Trump’s tariffs on U.S. gross domestic product ranged from a gain of 0.1 percent to a decline of 0.13 percent, depending on how trade patterns and prices adjust. This finding suggests that, in aggregate, tariffs neither significantly boosted nor meaningfully harmed overall economic growth in the short term.

At the same time, the study found that the Trump administration’s tariff policies were most effective in raising federal revenue and reducing reliance on Chinese imports.

Revenue Gains and China Trade Shift

Tariff revenue rose sharply in 2025, accounting for roughly 4 percent to 5 percent of total federal receipts, up from about 1.6 percent over the previous decade, the study found.

At the same time, China’s share of U.S. imports fell to about 7 percent by the end of 2025, down from roughly 23 percent in 2017 before earlier rounds of tariffs began.

However, the study found that the decline in Chinese imports did not translate into a major reshoring of production to the United States. Instead, trade shifted largely to other countries, particularly in Asia.

The authors said there was little evidence to date that tariffs had boosted domestic manufacturing employment, lowered America’s trade gap, or led to greater relocation of supply chains to countries closely allied with the United States.

“It remains to be seen whether the tariffs will reduce the trade deficit, lower prices set by foreign exporters, promote manufacturing jobs, increase ‘friend-shoring’ among aligned countries, or reshore key sectors,” the authors wrote. “Evidence from 2018-19 and 2025 indicators suggests a narrow path towards achieving these goals.”

Limited Overall Economic Impact

Despite the scale of tariff increases—raising average duties to their highest levels in decades—the overall economic effect remained modest, the study found, with three key factors limiting the tariff impact.

First, a majority of U.S. imports—about 57 percent—continued to enter duty-free, with tariffs applying to a relatively small share of total economic activity.

Second, the statutory tariff levels announced often ended up being lower in practice when applied at the border.

Third, the majority of U.S. exports did not face retaliatory tariffs, with the exception of China. This factor muted a common transmission channel of trade war pain.

Although the study found that higher import prices imposed costs on consumers and businesses, those losses were offset by increased government revenue and wage gains in some protected industries.

The authors estimated that about 80 percent to 100 percent of tariff costs were passed through into higher prices, with a baseline projection of about 90 percent.

That finding aligns with separate research from the Federal Reserve Bank of New York showing that most of the tariff burden is borne domestically, as well as business surveys indicating that firms often face higher input costs even when they delay passing them on to customers.

Recent Federal Reserve data suggest that many companies have absorbed part of the cost so far, citing price-sensitive consumers, but economists expect more of those costs to be passed through over time.

The Brookings study comes amid ongoing legal and policy debates over the future of U.S. tariffs.

In a Feb. 20 ruling, the Supreme Court struck down a major portion of Trump’s tariff program imposed under emergency powers, finding that the administration lacked authority under the International Emergency Economic Powers Act to implement sweeping duties.

The decision was followed by a lower court ruling that importers may be entitled to refunds on certain tariffs.

Future of Tariffs

Trump has criticized the rulings but signaled that he will continue pursuing tariffs through other legal channels.

Following the Supreme Court’s ruling last month, Trump implemented a 10 percent “global tariff” under Section 122 of the Trade Act of 1974. He threatened to raise the rate to 15 percent.

On March 4, Treasury Secretary Scott Bessent said it was his “strong belief” that tariff rates would return within five months to the levels in place before the high court’s decision.

Prior to the reversal of the administration’s reciprocal tariffs, the White House was narrowing the country’s month-to-month trade deficit.

The fourth-quarter current account deficit—an expansive gauge of the nation’s economic transactions with the rest of the global economy—fell to $190.7 billion, from $239.1 billion in the previous three-month span.

Despite changes to the administration’s trade agenda, tariff income continues, according to Treasury Department data.

As of March 23, monthly tariff revenues exceeded $23.4 billion, far higher than what was recorded at the same time in February.

The Trump administration recently launched new trade investigations to address unfair trade practices as it seeks to replace reciprocal tariffs struck down by the Supreme Court.

The first investigation under Section 301, initiated on March 11, focuses on addressing trade practices related to excess capacity and production in manufacturing sectors. The trading partners subject to this investigation are China, the European Union, Singapore, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India.

The second investigation, launched on March 12, focuses on imports produced with forced labor and targets roughly 60 countries. The investigation could result in a ban on imports of such goods.

Section 122 allows the president to implement a tariff rate of up to 15 percent on countries that maintain “large and serious” trade surpluses with the United States. The measure also authorizes the president to introduce limits on the volume of foreign goods entering the country. Such tariffs, however, may be imposed for no more than 150 days. Extending them would require congressional approval, which may be difficult to secure as the midterm elections approach.

U.S. Trade Representative Jamieson Greer told reporters on March 11 the administration is focused on completing the Section 301 investigations “as quickly as possible,” aiming to reach a conclusion before the Section 122 deadline.

Andrew Moran contributed to this report.