The Great De-escalation: IEEPA Tariffs Implemented Are Less Than Half the April Threat

As of November 2025, the economic fallout from President Trump’s International Emergency Economic Powers Act (IEEPA) tariffs is projected to be significantly less severe than initially feared. Due to subsequent modifications, negotiations, and exemptions, the tariffs actually implemented are less than half the statutory rates threatened in the spring.²

The current weighted average applied tariff rate under IEEPA stands at 10.8 percentage points, down sharply from the 23.2 percentage points threatened in April 2025.³

The Economic Impact: Harm Halved

The dramatic reduction in imposed tariff rates directly translates to a smaller forecasted drag on the US economy.

• Initial Threat (April): We estimated that if the original, sweeping IEEPA tariffs had been imposed, long-run US GDP would have fallen by 0.7 percent.⁴

• Current Implementation (November 17): Based on the tariffs currently in effect, we now estimate that long-run US GDP will fall by 0.4 percent.⁵

While a 0.4% reduction in long-run GDP is still a significant cost (and both estimates exclude the effect of foreign retaliation, which would further reduce output), the realized economic damage is projected to be substantially smaller than what economists initially predicted after the “Liberation Day” announcement.⁶

IEEPA Tariffs: Then vs. Now

The IEEPA tariffs were announced in two main waves: the “fentanyl” tariffs on Canada, Mexico, and China, and the “reciprocal” tariffs, which included a 10% baseline on most trading partners and much higher rates for 57 specific countries.⁷

Since the initial April announcement, President Trump has repeatedly modified the rates, postponed implementation, and granted several categories of goods exemptions.⁸ The most significant changes include:

1. China De-escalation: The threatened IEEPA tariff on China fell from an announced 145% in April (including the reciprocal tariffs) to 20% as of November 1.⁹

2. Negotiated Reductions: Most major trading partners, including the European Union and Japan, saw their implemented IEEPA rates drop from the initial threats.¹⁰

3. Targeted Increases: Notably, some trading partners, such as India and Brazil, saw their implemented IEEPA rates rise above the April threats due to separate emergency declarations related to issues like Russian oil purchases or other perceived emergencies.¹¹

4. Overall Applied Rate: The net effect of these changes is a 53% reduction in the weighted average applied IEEPA tariff rate, dropping from 23.2% to 10.8%.¹²

The table below summarizes the substantial shifts in statutory rates between the initial threat and the current implementation for the top US trading partners:

Note: Rates are based on statutory announcements under IEEPA and exclude all other pre-existing tariff programs (like Section 232).¹³

The Role of the Applied Tariff Rate

To accurately compare the statutory burden imposed on imports over time, this analysis uses the weighted average applied tariff rate.¹⁴

This metric focuses on the tax imposed on imported goods (based on 2024 import levels), irrespective of how importers adjust their behavior (e.g., stopping imports).¹⁵ By focusing solely on the statutory rate, we isolate and compare the change in the formal tax burden.

The chart below visually confirms the significant drop:

Policy Uncertainty Remains

While the implemented tariffs are less severe than the threats, two major factors continue to inject uncertainty into the economic outlook:¹⁶

1. Legal Challenge: The underlying legality of the tariffs is currently under review by the Supreme Court.¹⁷ A ruling that the President cannot use IEEPA to impose tariffs could remove the IEEPA tariffs altogether, potentially avoiding the economic effects entirely.

2. Investment Chill: Even with lower implemented tariffs, the high degree of policy uncertainty in trade matters continues to suppress investment and output, particularly in the immediate term, as businesses hesitate to make long-term supply chain decisions.¹⁸

Ultimately, the lower statutory rates implemented mean the realized economic harm will be less than the initial dire predictions, but the future of US trade policy remains highly uncertain.