Effective U.S. tariff rate seen settling near 15% by mid-2026, UBS says

Investing.com - The effective U.S. tariff rate is seen settling "near 15%" by the middle of next year, potentially driving up inflation and weighing on growth in the world’s largest economy, according to analysts at UBS.

In a note, the bank said Washington has "built a tariff wall" around the U.S. through a variety of bilateral deals and sectoral tariffs, although there are still "many holes" due to exemptions and delays to the levies. They estimated that the effective U.S. tariff rate now stands at "only around 9%." 

"This makes sense: It takes several weeks for goods shipped to the U.S. to arrive at ports and be subject to the higher tariffs, which for some, have only recently taken effect," the analysts said.

President Donald Trump’s aggressive trade stance, which has most recently featured the imposition of elevated "reciprocal" duties on a host of countries, has become a hallmark of the opening months of his second term in the White House. Trump has also suggested that more tariffs could be coming on specific sectors like pharmaceuticals and semiconductors.

Economists have long warned that Trump’s tariffs could dent the broader U.S. economy. While activity in the second quarter rebounded from a contraction in the first quarter, much of this was linked to lower imports following a surge in the opening three months of 2025. During that time, many businesses and consumers raced to lock in orders prior to Trump’s announcement of sweeping tariffs in early April.

Inflation, meanwhile, has stayed mostly tepid on a headline basis, although experts have begun to flag signs of rising prices in goods exposed to the tariffs.

Against this backdrop, the Federal Reserve has adopted a cautious attitude to interest rate decisions, as it waits to see if the tariffs will impact the wider economy. Yet support for this stance may be eroding as indications emerge of a cooling labor market -- a development that comes as Trump’s has frequently called on the Fed to quickly ratchet down rates to boost the economy.

The UBS analysts predicted that Trump’s levies will ultimately reduce U.S. real gross domestic product growth by around 1 percentage point and increase the consumer price index -- a closely-monitored gauge of inflation -- by roughly the same amount over the next twelve months.

"Overall, we expect the U.S. economy to slow down and the Fed to cut by a total of 100 basis points by mid-2026," the UBS analysts said.