The Hidden Toll of Tariffs

Summary

Seth Carpenter and Mayank Phadke discuss the current state of US tariffs, their impact on reshoring, and the outlook for tariff policy. They find little evidence of meaningful reshoring outside price-driven nominal gains, with steel as a key example where domestic prices have diverged from global peers.

• Effective US tariff rates have declined to 8.5% but are expected to stabilize around 10%.
• New Section 301 and 232 tariffs are likely to replace expiring authorities by summer.
• Steel production rose as imports fell, but total supply did not increase.
• US steel prices have diverged significantly from global peers.
• Risk of more sector tariffs points to higher domestic prices.
• Across industries, reshoring evidence is limited; nominal output gains reflect price increases, not real volume.
• Tariffs are raising costs for the US economy without clear boost to productive capacity.