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Fed Analysis Finds Tariffs on China May Hit US Economy Harder Than Expected

Direct-to-consumer imports mitigated inflationary effects last time.

By Erik Sherman | February 28, 2025 at 05:42 AM

According to a new analysis from the Federal Reserve Bank of New York, tariffs on China could have a bigger and worse impact on the U.S. economy than they did during President Donald Trump’s first term. The reason: direct-to-consumer sales have undermined the intended punitive effects.

There have been seven years of U.S.-imposed tariffs and export restrictions, even though the Biden administration didn’t change many of the Trump impositions. And yet, the result has been that imports from China dropped by much less than official U.S. statistics have reported. New rounds during the second Trump administration could have a bigger impact if imposed differently than in the past.

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