US effective tariff rate falls to 7.4% as import mix shifts

The U.S. effective tariff rate has fallen to 7.4% from 9.4%, as changes in U.S. import patterns have compounded the impact of a shift from the temporary Section 122 surcharge to new Section 301 tariffs on imports from 60 economies, including the European Union, according to Fitch Ratings.

The revised estimate also reflects Fitch’s use of annualized January-May 2026 trade flows instead of the 2024 import data used in its previous calculations.

Had trade flows remained at 2024 levels, the change in tariff policy alone would have lowered the effective tariff rate to 8.4%. The additional decline to 7.4% reflects changes in the composition and sourcing of U.S. imports.

Based on annualized January-May data as a proxy for 2026, imports of electronics and semiconductors, which are largely excluded from tariffs, increased to about USD 800 billion from USD 340 billion in 2024. Meanwhile, imports from China, which faces the highest effective tariff rate among major U.S. trading partners, fell 43% over the same period.

President Donald Trump imposed a temporary 10% global import surcharge under Section 122 of the Trade Act of 1974 after the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act. The surcharge took effect Feb. 24 and expired July 24. It was then replaced by Section 301 tariffs on products from economies covered by U.S. Trade Representative investigations into forced-labor practices.

The Section 301 framework has four main tariff regimes. Imports from countries including Mexico, Canada, India and the United Kingdom face a fixed additional tariff of 10%, while imports from China, Vietnam and most other investigated economies face a fixed additional tariff of 12.5%. For the European Union and Taiwan, the Section 301 tariff is set so that the combined most-favored-nation, or MFN, tariff and Section 301 rate do not exceed 10%. The corresponding combined-rate cap is 12.5% for Japan, South Korea and Switzerland.

Under the capped regimes, products already subject to an MFN tariff at or above the threshold incur no additional Section 301 duty, while products with lower MFN rates face only the additional duty required to reach the cap. The framework also includes broad product exclusions.

Fitch’s effective tariff rate estimate also incorporates the separate 25% Section 301 tariff on Brazil, which is subject to significant product exclusions. It includes the announced 50% Section 338 tariffs on certain Canadian motor vehicle, dairy and alcoholic beverage imports, scheduled to take effect Aug. 19, 2026. The Canadian tariffs cover nearly USD 20 billion of goods.

If the Canadian tariffs are not implemented as announced, Canada’s effective tariff rate would decrease by approximately 2.2 percentage points, while the overall U.S. effective tariff rate would fall by about 0.25 percentage point.

China continues to have the highest effective tariff rate among major U.S. trading partners, rising to approximately 22.3% from 19.2% under the temporary Section 122 surcharge.

Brazil’s effective tariff rate also increases to 14.8% from 11.4%, reflecting its separate 25% Section 301 tariff, while Japan’s rises more modestly to 13.3% from 12.6%.

Switzerland’s effective tariff rate rises to 7.1% from 4.3%, while Canada’s increases to 5.3% from 4.1%.

By contrast, Vietnam’s effective tariff rate falls to 10.2% from 13.2%, South Korea’s to 9.7% from 11.3%, and Taiwan’s to 2.8% from 5.5%. Other notable declines include India, at 8.3% from 10.7%, and Mexico, at 3.7% from 5%.