"Tariff revenues are dramatically falling short of initial White House expectations, generating roughly $100 billion less than projected, according to a recent analysis from Pantheon Macroeconomics. Treasury Secretary Scott Bessent predicted in August that tariffs would raise "well over half a trillion, maybe towards a trillion-dollar number," but data compiled through November 25 implies that customs and excise taxes annualize to only $400 billion."
"This shortfall stems from an Average Effective Tariff Rate (AETR) that is far lower than anticipated. The AETR is currently estimated at just 12%, falling significantly short of the near-20% widely expected earlier this spring. Even the Congressional Budget Office (CBO) was surprised, reducing its estimate of the pre-substitution tariff rate to 16.5% from 20.5% last month. Pantheon Macro Chief U.S. Economist Samuel Tombs and Senior U.S. Economist Oliver Allen identified three primary factors driving the lower-than-expected AETR."
Tariff revenues are approximately $100 billion below initial expectations, annualizing around $400 billion through November 25. The shortfall reflects an Average Effective Tariff Rate (AETR) near 12%, well under earlier expectations near 20% and below the Congressional Budget Office's recent pre-substitution estimate of 16.5%. Lower AETR results largely from shifts in sourcing and trade patterns. U.S. imports from China have fallen about 30%, cutting China's import share from 13% to 9%, while imports from Vietnam rose to 6%, with many goods facing a 20% tariff rather than the near-50% applied to Chinese imports. Higher-than-expected USMCA tariff-free compliance from Canada and Mexico further reduces tariff receipts.
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