The world is paying more for global trade than it did a year ago. Exchanges are becoming more expensive. The trade policy of U.S. President Donald Trump has upended the commercial relationships that countries spent decades building through layers of diplomacy. The so-called “reciprocal” tariffs that Trump imposed broadly on the famous April 2 of this year are still evolving. The crude chart he presented to the world on the day the president dubbed “Liberation Day” became obsolete within just a few months.

The White House is constantly shifting its trade policy, making changes that are leaving traders stunned. Trade rates are experiencing extreme volatility. Companies and merchants have to adapt to each new Trump move. And Trump has made many moves in this whirlwind dance. “The effective tariff rate implied by policy has fluctuated substantially this year, starting at 2.4% in early January and peaking at about 28% in the wake of the April 9 and 13 announcements,” notes the Yale University Budget Laboratory, which closely tracks import taxes.

On April 2, Trump imposed a universal minimum tariff of 10% on all imports and hit his traditional trading partners harder. For the European Union, for example, he imposed an additional 20% tariff. Since then, the White House has been adjusting tariffs based on agreements that included other concessions. Over the past two weeks, it has eased trade tensions on many food products.

Trump’s chaotic tariff policy is shifting the balance of power in global trade. Countries that have been hit with lower rates have become more competitive overnight, while those facing higher levies are losing appeal. After the latest negotiations, a 15% tariff appears to be the benchmark for trading partners.

This is precisely one of the points highlighted last week by the European Commission to improve the bloc’s economic forecasts. The EU executive cites the “relative advantage for the EU economy” compared with countries or blocs facing higher U.S. tariffs to explain the upward revision of its projections. Although it provides a certain competitive edge, the new trade policy still fails to convince economists, companies, and households.

Sophie Altermatt, an economist at Julius Baer, cites the recent U.S. trade agreement with Switzerland, which reduces tariffs from 39% to 15%. “Switzerland now faces the same tariff rate as the EU, eliminating its competitive disadvantage in the U.S. market.” She continues: “While the agreement offers some relief to exporters, their situation remains challenging. Even with the agreement, the U.S. tariff rate is significantly higher than before President Trump took office.”

While 15% is an advantage for trading partners, it is much higher than at the beginning of the year. Following recent changes, “citizens face an average effective tariff rate of 14.4%, the highest since 1939,” according to calculations by Yale’s analytical department.

That, of course, has consequences: “Over the last 12 months, 77% of business owners say their costs have increased,” according to the latest Bank of America Business Owners Report, which points to inflation and tariffs as the top concerns for smaller business owners.

A report from the Consume Technology Association (CTA) notes that nearly half of those who expect to spend less during the upcoming holiday season attribute their decision to economic concerns, largely due to higher prices caused by tariffs.

Economists point out that announcements are one thing, and actions are another. U.S. Trade Representative Jamieson Greer recently lamented the slow progress of the EU-U.S. trade agreement. He noted that Europe has yet to reduce tariffs on U.S. imports. He also pointed out that China has not yet finalized a rare earths agreement, although U.S. Treasury Secretary Scott Bessent expects a deal before next Thursday, when American families celebrate Thanksgiving. But the reality is that details still need to be ironed out.

In any case, Trump’s erratic trade policy raises questions about whether he used tariffs to gain political leverage over his trading partners — as if employing tariffs as a bargaining tool to achieve other objectives. For example, Europe was pushed to invest billions in the U.S. and increase defense spending to benefit American companies, while Mexico was pressured to tighten border controls.

Economists often remind us that everything comes at a cost. Raising tariffs also has repercussions: U.S. households are struggling with the rising cost of living. “Heightened political concerns about U.S. consumers’ inflation perceptions seem to be leading a drive to reduce the tariffs U.S. importers pay on food products,” explains Paul Donovan, chief economist at UBS.

The debate over the affordability crisis has spread like wildfire across the United States following Zohran Mamdani’s victory in the New York City mayoral election. The socialist politician made the cost of living a central theme of his campaign. Since then, the White House has been trying to regain the initiative with measures aimed at lowering the cost of living, including some tariff cuts.

For this reason, Trump approved several substantial changes over the past two weeks. He reached an agreement with Argentina, Ecuador, Guatemala, and El Salvador to reduce trade tariffs on a wide range of products not produced in the United States. The following day, he issued an executive order exempting 200 basic grocery items from tariffs, including beef and other meat products, bananas, pineapples and other tropical fruits, coffee, and vegetables, among others.

He also struck a deal with Switzerland to lower trade duties from 39% to 15%. That same rate now applies to the United States’ main trading partners, such as the European Union and Japan, following the trade agreements reached last summer. This appears to be the new benchmark.

Last week, the tariffs of Brazil were also adjusted. The country still has a general rate of 50%, but the Republican president exempted a wide range of food products — including coffee, coconut, and beef — from the duties.

“Bilateral negotiations with Latin American countries will be limited in their scope because of Mercosur trade pact rules. Other tariff reductions have not necessarily reduced consumer prices,” according to Paul Donovan.

In fact, according to Yale University, tariffs are regressive taxes. In a study published last week, the research center concluded that a household in the lowest income decile — the 10% with the least income — faces a real income loss of $920, while an average household in the highest decile — the 10% with the most income — loses $3,871. Although the absolute amount is higher for wealthier households, proportionally it represents a much smaller cut in income. In other words, low-income families bear a tariff burden of 2.4%, compared with 0.8% for the wealthiest, three times higher. Vulnerable households spend a larger share of their income on tariff-exposed goods, such as clothing, shoes, electronics, and vehicles. Tariff rates on these products have not been this high since the beginning of World War II.

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