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The Budget Lab at Yale

Also known as: Budget Lab at Yale

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Tracking the Economic Effects of Tariffs | The Budget Lab at Yale budgetlab.yale.edu Budget Lab at Yale Mar 2, 2026 36 facts

referenceThe Budget Lab at Yale utilizes data from Haver Analytics databases, specifically USECON (U.S. Economic data), USNA (National Accounts/PCE price indices), USTRADE (Trade data by country), USINT (International trade), and LABOR (Employment by industry).

claimTables A1–A2 in the report by The Budget Lab at Yale use overall PCE price indices (domestic + imported) rather than the import-weighted index used in Tables 1a–1b.

claimThe Budget Lab at Yale suggests that an increase in goods prices since the beginning of the year, relative to pre-2025 trends, is a possible indication that tariffs are raising consumer goods prices.

measurementThe Budget Lab at Yale estimated tariff passthrough at 51% for core goods and 72% for durables as of June 2025 using the LP trend method.

procedureThe Budget Lab at Yale estimates the pre-2025 trend for goods prices using a local projection method that incorporates recession and pandemic controls.

measurementThe Budget Lab at Yale calculated a simulated annual revenue of $319 billion after adjusting for decreases in other revenue sources like federal payroll and corporate income taxes.

procedureThe Budget Lab at Yale constructs indices of tariff-sensitive employment by weighting employment by industry-level tariff exposure.

measurementThe Budget Lab at Yale projected an annualized tariff revenue of $334 billion if monthly tariff revenue remained at the level of the two-month average of December and January.

claimThe Budget Lab at Yale's 'State of Tariff Report' includes two measures of average effective tariff rates: pre-substitution and post-substitution.

measurementThe implied passthrough of tariffs to imported consumer goods prices ranges from 40–76% for core goods and 47–106% for durable goods, according to The Budget Lab at Yale.

measurementThe Budget Lab at Yale estimates the tariff passthrough to imported core goods prices at 76% and to imported durables prices at 106% through December 2025 using the LP trend method.

referenceThe effective tariff rates reported in The Budget Lab at Yale's State of Tariff Report are model-based estimates of the average rates across sectors, weighted by 2024 trade flows.

claimThe Budget Lab at Yale notes that changes in the value of the US dollar might be driven by factors other than tariffs, which complicates the evaluation of the medium-to-long-term effects of tariffs on the US trade deficit.

claimThe Budget Lab at Yale report reviews economic indicators related to the effect of tariffs on the US economy as of March 2, 2026.

claimThe Budget Lab at Yale assumes in its modeling that the passthrough of tariffs to consumer prices will ultimately reach 100%.

claimThe Budget Lab at Yale implies that the ability of firms to rely on pre-tariff stocks of goods will degrade shortly based on the observed import data.

referenceThe Budget Lab at Yale utilizes the MA/US macroeconometric model, maintained by S&P Global, for short-run analysis and the Global Trade Analysis Project (GTAP) model for medium/long-run analysis when estimating fiscal and macroeconomic effects of policy.

claimThe Budget Lab at Yale reports that tariffs led to higher prices, with Personal Consumption Expenditure (PCE) core goods prices increasing by 2.0% during 2025 through December.

claimThe Budget Lab at Yale finds no evidence of a reduction in non-petroleum import prices as a response to tariffs, suggesting that foreign producers are not absorbing the incidence of tariffs through lower export prices.

measurementThe Budget Lab at Yale estimates that if monthly tariff revenue remains at the level of the 2-month average of December and January, the annualized revenue for the fiscal year would be $334 billion.

claimThe Budget Lab at Yale found no evidence of a reduction in non-petroleum import prices in response to tariffs.

measurementThe Budget Lab at Yale estimates tariff passthrough using a log-linear trend at 56% for core goods and 117% for durables.

claimThe Budget Lab at Yale asserts that the third approach to estimating tariff effects—assuming prices would have remained at their December 2024 level—underestimates true price increases from tariffs by ignoring counterfactuals, though it provides an easy lower-bound estimate.

procedureThe Budget Lab at Yale utilizes three distinct approaches to estimate the counterfactual level of prices in the absence of tariffs: (1) using trend estimates reported in Figure 5, (2) using data from 2023-2024 to project forward pre-2025 prices, and (3) assuming prices would have remained at their December 2024 level and using the change in prices during 2025 through December.

measurementThe Budget Lab at Yale estimates tariff passthrough using a conservative method (raw price changes) at 40% for core goods and 47% for durables.

procedureThe Budget Lab at Yale's revenue estimates in the 'State of Tariff Report' account for decreases in other revenue sources, such as federal payroll and corporate income taxes, by following the methodology of the U.S. Congressional Budget Office.

measurementThe Budget Lab at Yale projected that tariff revenue would raise $246 billion in annual revenue for fiscal year 2026, based on their last pre-SCOTUS estimate.

claimThe Budget Lab at Yale's assumption of 100% tariff passthrough to consumer prices is supported by studies of the 2018 tariffs, specifically Flaaen, Hortacsu & Tintelnot (2020) and USITC (2023).

claimThe Budget Lab at Yale asserts that the third approach (assuming constant December 2024 prices) provides a lower-bound estimate of tariff-induced price increases because it ignores counterfactuals.

referenceThe Budget Lab at Yale defines effective tariff rates (ETRs) in their 'State of Tariff Report' as model-based estimates of average rates across sectors, weighted by 2024 trade flows.

perspectiveThe Budget Lab at Yale's report on tariff effects provides descriptive data rather than causal estimates, noting that concurrent economic changes like the growth of generative AI and the passage of the One Big Beautiful Bill Act are not controlled for in the analysis.

procedureThe Budget Lab at Yale (TBL) constructs an Imported PCE Goods Price Index by reweighting standard Personal Consumption Expenditures (PCE) component price indices based on their import content, giving higher weight to categories like electronics, motor vehicles, and apparel.

measurementThe Budget Lab at Yale calculated a simulated annual tariff revenue of $319 billion after adjusting for decreases in other revenue sources.

measurementThe Budget Lab at Yale estimates that total revenue collected under the International Emergency Economic Powers Act (IEEPA) reached approximately $168 billion through February 19th, 2026.

measurementThe Budget Lab at Yale estimates that full passthrough price effects from 2025 tariff increases will add 3.4 percentage points to core goods prices and 3.0 percentage points to durables prices through December 2025.

measurementIn December, core goods prices and durable goods prices were 3.0% and 3.5% above The Budget Lab at Yale's estimate of the pre-2025 trend, respectively.

Tariffs are a particularly bad way to raise revenue | Brookings brookings.edu Brookings Nov 4, 2025 1 fact

referenceResearch organizations including the Yale Budget Lab, McKibbon (2025), and the Penn Wharton Budget Model have conducted analyses to estimate the amount of revenue that could plausibly be raised through tariffs.