Why Predicted and Actual Tariff Rates Diverged in May 2025

In May 2025, the U.S. expected an average tariff rate of 17.5%, but the actual rate was only 8.7%, exposing gaps in enforcement and forecasting. Importers quickly adapted by shifting purchases from high-tariff countries like China and Canada to lower-tariff sources such as Vietnam and the EU. The shortfall mainly stemmed from slow policy implementation, outdated customs systems, and lingering exemptions—especially in electronics and machinery. Economists expect the rate to rise to 10–14% once delays are fixed, highlighting that effective execution is as vital as policy design.

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*Source: https://www.richmondfed.org/publications/research/economic_brief/2025/eb_25-29

In May 2025, the United States expected an average tariff rate of 17.5 percent based on newly announced trade policies, but the actual rate ended up being only 8.7 percent. This unexpected gap raised serious questions about the accuracy of tariff forecasts and the government’s ability to enforce its trade policies effectively. Many importers responded by changing where they bought their goods. Instead of relying on high-tariff countries such as China and Canada, they began purchasing more products from countries like Vietnam and members of the European Union, where tariffs were much lower. This shift in trade routes reduced the overall tariff burden and revealed how quickly businesses could adapt when faced with new economic pressures. It also showed that private companies often react faster to changing conditions than the government systems meant to regulate them.

The main reason for the difference between predicted and actual tariff rates was not just how importers behaved but how slowly the new rules were carried out. Many products that were expected to face high tariffs did not actually generate the same level of tax revenue. This happened because customs agencies had trouble updating their systems, some shipments arrived before the new tariffs took effect, and several older exemptions were still valid. Industries like electronics and machinery were especially affected since they had high expected tariffs but very low actual payments. Economists believe that once these administrative delays are resolved, the real tariff rate will rise to somewhere between 10 and 14 percent. The situation in May 2025 proved that creating a policy on paper is only the first step, and that real success depends on how well it is put into practice.