Fitch projects U.S. tariff rate to rise sharply by August

July 18, 2025 (MLN): Fitch Ratings has updated its U.S. Effective Tariff Rate (ETR) Monitor, projecting a significant rise in the overall tariff burden beginning August 1, 2025.

The ETR is expected to increase to 19.4% from 14.1%, based on the implementation of higher reciprocal tariffs and newly introduced copper duties.

President Trump has also indicated that additional tariffs on semiconductors, their electronic derivatives, and pharmaceuticals may take effect on August 1, pending the outcome of ongoing Section 232 investigations.

Under this scenario, the ETR could further increase to approximately 23.7%.

In April, the administration paused the implementation of country-specific reciprocal tariffs.

However, recent letters sent to various countries outline new tariff rates ranging from 25% to 50%.

Currently, a baseline tariff of 10% is applied to most countries not addressed in the recent correspondence.

Trump also noted the possibility of imposing a blanket tariff of 10% to 15% on approximately 150 countries, posing additional upside risk to ETR levels.

New trade agreements with Vietnam and Indonesia set reciprocal tariff rates at 20% and 19%, respectively.

Significant changes have also been introduced for key trading partners.

A 50% duty on all copper imports, along with tariffs of 35% on Canada and 30% on Mexico, will increase their ETRs to 11.7% and 13.1%, up from 7.5% and 9.5%.

These figures are based on assumptions that approximately half of previous tariff-free imports will qualify as USMCA compliant.

Tariffs on goods from the European Union are also set to increase to 30% from 20%, resulting in ETRs ranging from 12% to over 30% for individual EU countries, depending on the product mix and import shares.

Bangladesh will face the highest ETR under the August 1 regime at around 50%, reflecting the combination of a new 35% tariff and a pre-existing 15% duty. Bangladesh receives no tariff carveouts under the current framework.

There are no changes to the reciprocal tariff rate for China, with the ETR for Chinese imports remaining at 41.4%.

The updated U.S. ETR Monitor now includes a comprehensive breakdown of import volumes and duties by sector through 2025 for top trading partners including China, the European Union, Japan, Vietnam, Canada, and Mexico.

The tool enables users to assess tariff scenarios by adjusting sector and country-specific rates and import volumes and will continue to be updated with any significant policy changes.

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