Knowledge Tree
Federal Reserve Bank of Richmond
Also known as: Federal Reserve Bank of Richmond
Facts (27)
Sources
Tariffs: Estimating the Economic Impact of the 2025 Measures and ... richmondfed.org Apr 2, 2025 25 facts
measurementUnder the Richmond Fed's 'Scenario 2' tariff model, Canada's Average Effective Tariff Rate (AETR) increases to 11.9 percent, while Mexico's AETR rises to 15.5 percent.
measurementThe implementation of the Richmond Fed's 'Scenario 3' tariff model causes the overall Average Effective Tariff Rate (AETR) to increase from 10.4 percent to 12.4 percent.
perspectiveThe authors of the Federal Reserve Bank of Richmond Economic Brief No. 25-12 state that the views expressed in the article are those of the authors and not necessarily those of the Federal Reserve Bank of Richmond or the Federal Reserve System.
measurementThe Richmond Fed's 'Scenario 2' economic model adds 25 percent tariffs on goods imported from Canada and Mexico that are not covered under the USMCA, resulting in an overall Average Effective Tariff Rate (AETR) increase from 7.1 percent to 10.4 percent.
claimThe economic analysis of tariff impacts presented by the Federal Reserve Bank of Richmond does not incorporate proposals to impose reciprocal tariffs or additional tariffs on copper, semiconductors, pharmaceuticals, timber, lumber, and certain agricultural products.
procedureThe Richmond Fed researchers estimate industry-level tariff impacts by aggregating tariffs using each product-country pair's share of total industry imports as weights, classifying industries according to the North American Industry Classification System (NAICS) at the three-digit level.
claimThe Federal Reserve Bank of Richmond permits the photocopying or reprinting of the Economic Brief No. 25-12 in its entirety.
measurementThe most aggressive tariff package simulated by the Richmond Fed includes a 25 percent tariff on EU imports, 20 percent on Chinese imports, 25 percent on steel and aluminum, 25 percent on non-USMCA goods from Canada and Mexico, and 25 percent on auto imports.
measurementUnder the Richmond Fed's 'Scenario 3' tariff model, Mexico's Average Effective Tariff Rate (AETR) rises to 20.1 percent, Canada's AETR rises to 14.1 percent, and the European Union's AETR increases from 2.5 percent to 4.4 percent.
claimManufacturing and mining industries face the highest exposure under the proposed 2025 tariffs according to the Richmond Fed's AETR analysis.
measurementUnder the Richmond Fed's 'Scenario 3' tariff model, China's Average Effective Tariff Rate (AETR) remains unchanged at 33.5 percent because automobiles from China were already subject to elevated tariffs under prior scenarios.
claimThe Richmond Fed observes that while approximately half of imports from Canada and Mexico fall outside the scope of the USMCA, these goods do not constitute the most import-heavy segments of U.S. trade with those countries, leading to a more dispersed impact across sectors compared to the high-volume sector targeting in Scenario 1.
claimThe Richmond Fed's 'Scenario 3' economic model adds a 25 percent tariff on all motor vehicle imports, regardless of origin, which primarily targets products under Chapter 87 of the Harmonized Tariff Schedule (HTS).
referenceThe authors of the Richmond Fed Economic Brief construct a benchmark average effective tariff rate (AETR) using 2024 U.S. Trade Census data, following the methodology established by Michael Waugh.
measurementUnder the Richmond Fed's 'Scenario 2' model, manufacturing industries including fabricated metals, electrical equipment, apparel, and furniture experience average tariff rates ranging between 10 percent and 15 percent.
claimThe Richmond Fed estimates that the overall cost increase for industries under 'Scenario 2' is smaller than the headline 20 percent tariff because these industries source a portion of their imports from countries unaffected by the tariff increases.
measurementUnder the Richmond Fed's 'Scenario 3' model, the transportation equipment sector faces average tariff rates above 25 percent, reflecting the heavy dependence of U.S. auto manufacturing on imported parts and finished vehicles from Canada, Mexico, and the EU.
claimUnder the Richmond Fed's 'Scenario 2' tariff model, U.S. industries such as leather, apparel, and textile products face steep tariff increases due to their reliance on imports from China and USMCA partners in categories not covered by trade agreements.
claimSectors including oil and gas, petroleum and coal products, and agriculture-related goods like crops and forestry face lower average tariffs under the Richmond Fed's 'Scenario 2' model due to limited exposure to targeted trade flows or protection under existing trade agreements.
referenceThe 2023 working paper titled 'Global Supply Chains: The Looming 'Great Reallocation'' is a cited source in the Federal Reserve Bank of Richmond Economic Brief No. 25-12.
claimThe Richmond Fed's 'Scenario 3' model builds on 'Scenario 2' by adding a 25 percent tariff on all automobile imports, which significantly impacts sectors tied to the automotive supply chain.
referenceThe 2019 working paper titled 'The Return to Protectionism' is a cited source in the Federal Reserve Bank of Richmond Economic Brief No. 25-12.
measurementThe Richmond Fed's 'Scenario 2' tariff model assumes a 20 percent increase on all imports from China, a 25 percent increase on all aluminum and steel imports, and a 25 percent tariff on non-USMCA goods from Canada and Mexico relative to the benchmark case.
referenceThe Federal Reserve Bank of Richmond published the Economic Brief No. 25-12 titled 'Tariffs: Estimating the Economic Impact of the 2025 Measures and Proposals' in April 2025, authored by Marina Azzimonti, Zachary Edwards, Sonya Waddell, and Acacia Wyckoff.
measurementThe Richmond Fed's 'Scenario 4' economic model introduces a 25 percent tariff on all imports from the European Union, causing the overall Average Effective Tariff Rate (AETR) to increase from 12.4 percent to 17.0 percent.