U.S. tariffs could remain high after Trump's term ends, experts say

According to a PwC audit and advisory survey conducted last month among 633 U.S. business leaders, about 86% expect tariffs to remain elevated for many years to come, including after the end of President Donald Trump’s term. Rohit Kumar, co-leader of PwC’s U.S. tax practice, said there is a basis for this view for several reasons. 'By January 2029, the global market is likely to view the tariffs implemented during Trump's second term as the new normal,' Kumar, who previously served as a senior aide to former Republican Senate leader Mitch McConnell, noted. Kumar added that by then, companies are likely to have completed most of the adjustments needed in supply chains, pricing, and trade operations to adapt to the new tariff environment. Trump’s second term is expected to end in January 2029, when the next administration takes office. Another reason tariffs are unlikely to be rolled back is that the measure is generating substantial revenue for the U.S. government. According to Kumar, even if tariff revenues turn out to be lower than forecast, they would still represent a significant source of revenue in a federal budget that has not yet improved, while the Social Security Trust Fund is nearing insolvency, projected around 2032 or early 2033. Moreover, Kumar said tariffs are not a tool exclusively supported by one party. Although Democrats have recently criticized Trump's tariff policy, historically there have been party members who supported or at least considered the measure. 'Many economies around the world have long tended to prefer tariffs. However, from the early 2000s, the U.S. once played a role in pushing countries toward freer trade. Now, as the U.S. steps back from that leadership, many countries are gradually returning to the old approach,' Kumar pointed out. Similarly, Kristin Bohl, head of international customs and trade at PwC, argued that the developments in the last decade show that high tariffs tend to be sustained for long periods. She noted that while the Trump administration’s first term faced pushback from business and inflation concerns when tariffs were introduced, the Biden administration not only did not roll back these levels but also raised some tariffs. In the second term, Trump continued to push tariffs higher. 'Tariffs have been applied and maintained across three different administrations, including two under the same president,' Bohl commented to MarketWatch. According to Yale Budget Lab’s estimates, the current average effective U.S. tariff is 11.8% – the highest since the early 1940s if last year is excluded. Legally, on February 20, the U.S. Supreme Court ruled that President Trump did not have the authority to use the International Emergency Economic Powers Act (IEEPA) to impose tariffs. Soon after, he shifted to a temporary global 10% tariff under Section 122 of the Trade Act of 1974. Meanwhile, his administration is seeking additional legal bases to sustain or replace the prior tariff levels.