Fitch lowers U.S. ETR to near 14% amid China fentanyl tariff cut

November 06, 2025 (MLN): Fitch Ratings has revised its estimate of the U.S. Effective Tariff Rate (ETR) downward to 13.6%, marking a 1.4 percentage-point drop from the 16% level reported on August 5. The adjustment reflects several recent trade policy changes, led by a reduction in U.S. tariffs on China’s fentanyl-related imports, which were cut from 20% to 10%.

The updated ETR also incorporates progress in trade agreements with Japan, Malaysia, Thailand, and South Korea, alongside the introduction of new tariffs on lumber, household furniture, heavy trucks, and related components.

According to Fitch, the updated figures do not include the postponed tariffs on pharmaceuticals, which have been deferred indefinitely. Additionally, the update excludes aluminum and steel derivatives used in vehicles, machinery, and packaging materials, due to ambiguity in determining their aluminum content under revised tariff guidance.

Among major U.S. trading partners, India now faces the highest ETR at 35%, followed by Brazil at 29.3% and China at 29.2%, the latter representing a sharp drop from roughly 41% prior to the fentanyl-related tariff reduction.

For North American partners, Canada’s ETR stands at 5.9% and Mexico’s at 5.8%. The report notes that as of July 2025, 88% of imports from Canada and 82% from Mexico entered the U.S. duty-free under the USMCA. However, tariffs on non-USMCA-compliant Canadian goods have increased from 25% to 35%, while those on similar Mexican imports remain at 25%.

The update draws on July 2025 data detailing country-level duties paid and U.S. import flows across all major trading partners, including the EU, China, Japan, Vietnam, South Korea, Taiwan, India, and the U.K.. Fitch added that the ongoing U.S. government shutdown has delayed the release of August and September import and duty data.

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