Commerce Secretary Howard Lutnick announced on May 11 that the 10% baseline tariff on imports will remain in place indefinitely.

This aligns with President Donald Trump’s previous statements on tariffs. Lutnick said, “We do expect a 10% baseline tariff to be in place for the foreseeable future.”

Lutnick addressed concerns about potential cost increases for consumers, noting that “the business and the countries” would absorb the tariff costs.

However, some companies are passing these costs on to consumers, which may be contributing to a decline in consumer confidence since the tariffs were first introduced.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ Historical tariff levels signal economic warning signs

Today’s tariff levels mark a historical shift in U.S. trade policy that deserves deeper examination.

The current average effective U.S. tariff rate has reached 22.5%, the highest since 1909, creating trade conditions not seen in over a century 1.

Economic projections from Yale’s Budget Lab indicate these tariffs are expected to reduce real GDP growth by 0.9 percentage points in 2025, with long-term GDP reductions estimated at $180 billion annually 1.

This recalls earlier protectionist periods like the Smoot-Hawley era of 1930, when high tariffs contributed to a collapse in international trade. U.S. imports from Europe plummeted from $1.3 billion in 1929 to $390 million in 1932 2.

The Federal Reserve’s real-time analysis confirms that tariff effects fully pass through to consumer prices within two months of implementation, making their economic impact both immediate and significant 3.

Post-World War II economic prosperity coincided with the U.S. shift toward trade liberalization, providing a historical counterpoint to current protectionist policies 4.

2️⃣ Tariffs function as a regressive hidden tax on consumers

Despite Secretary Lutnick’s claim that “businesses and countries” will pay for tariffs, multiple economic studies demonstrate that consumers ultimately bear most costs.

Yale’s Budget Lab research calculates the short-run price increase from all 2025 tariffs at 2.3%, translating to an average household purchasing power loss of $3,800 per year 1.