LONDON: U.S. consumers face an effective U.S. tariff rate of more than 20%, the highest since the early 1900s, the International Chamber of Commerce has estimated following President Donald Trump’s import levy announcements this week.
Rates are already around 16%, their highest since the 1930s.
The calculation is based on the tariffs included in letters sent by Trump’s administration this week to trading partners, 50% copper tariffs, and the threat of duties as high as 200% on pharmaceutical tariffs, Andrew Wilson, ICC deputy secretary general told Reuters on Friday.
The ICC represents 45 million companies in more than 170 countries.
Wilson said it was notable that financial markets were “pretty sanguine” even after the raft of tariff threats this week.
“I think what’s particularly interesting this week is the disconnect between the reaction of the financial markets (…) and the reaction of companies, who I think remain acutely concerned about the direction of tariffs, U.S. trade policy, the inherent risks of that,” he told Reuters.
The relative market calm this week was in contrast to the selloff across equities and Treasuries in April after Trump announced sweeping tariffs and then hit pause for 90 days until July 9. This week he extended the deadline for trade deals until August 1.
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Investors seem to have accepted a 10% baseline tariff, Wilson said, although Trump floated the idea late on Thursday that it could go up to 20% for some countries.
The ICC sees the latest moves as a way for the administration to test “in real time” the financial market’s sensitivity to hefty tariffs.
“Our view right now, based on what we’ve seen over the past few days, is the Administration is very much set on achieving the highest possible effective tariff rate for the U.S.,” said Wilson.
“There’s no doubt they’re sensitive to the equities market and the performance of US Treasuries. But basically, how high can they get the number without freaking out the financial markets?” he said.
Wilson noted that the administration has been touting tariffs as a significant revenue source. Treasury Secretary Scott Bessent said Washington had taken in about $100 billion so far and could collect $300 billion by the end of the year.
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