Tariff Rules Engine

The TPC Tariff Rules Engine determines the tariff rate applicable to each import that appears in historical US International Trade Commission (USITC) data. These rates are computed for each import daily, by policy. Each policy can apply a rate to an import that it covers. Coverage is determined by the following core parameters: the import's country of origin, HTS product code (at any detail level, up to 10-digit), and the policy's effective date(s). Parameters can be used to select or deselect imports and are obtained from Federal Register notices and White House announcements. Policies can also be encoded relationally to each other, meaning their coverage can be specified relative to another policy's coverage. For example, the Section 122 tariff applies to specific countries after a specific date, but only if the affected goods do not overlap with Section 232 tariffs. The total tariff rate on an import is the sum of the rates applied by all applicable policies. Overall, the rules engine estimates about 10 billion tariff rates.

Revenue Estimates

The revenue generated by tariffs is estimated by aggregating daily tariff rates for each import by fiscal year. TPC's Tariff Revenue Model uses the annual tariff rate on an import, the competitiveness of comparable domestic industries, and the duration of tariffs to determine behavioral adjustments, including the change in demand for that import. The annual tariff rate is then applied to the post-adjustment value of imports to obtain revenue generated by a policy. For reporting the total change in federal revenues, TPC applies a standard offset that accounts for a change in income and payroll taxes based on published estimates from the staff of the Joint Committee on Taxation.

Distributional Estimates

TPC assumes that tariffs on imported goods are fully passed through domestically, consistent with substantial evidence on import taxes (see USITC; HBS Pricing Lab; Gopinath and Neiman). TPC’s Tariff Supply Chain Model characterizes the relationship between goods in the economy, which is used to map the burden on imported goods to final goods and services. For example, that model can distribute tariffs levied on intermediate goods (e.g., steel) to final goods (e.g., buildings). The more a final good uses imported intermediate goods, the more tariff burden is reflected in the final cost. The supply chain model adapts the Bureau of Economic Analysis's Input-Output (I-O) framework. The burden from changes in tariffs is evaluated at pre-policy quantities (i.e., before changes in demand and other behavioral adjustments) and therefore differs from revenue collected, similar to how TPC distributes changes in other federal taxes. Results from the supply chain model can be used to analyze the impact of tariffs on specific goods or industries, and to distribute tariffs to households.

Distributing Burden to Tax Units

TPC allocates tariffs to tax units in the same way it models excise taxes such as gasoline taxes. Specifically, it distributes the burden based on the income sources and consumption baskets of tax units in TPC's large-scale microsimulation model. Burden in a given year is distributed to tax units based on their share of affected income sources and an adjustment for their relative consumption of taxed and untaxed goods. Price increases are relative in the sense that aggregate price level and nominal incomes do not change, consistent with conventional scoring assumptions.

Tariff Rules Engine v2.1

• Incorporates the following new policies:
  • Finalized Section 301 tariff on trading partners that allegedly fail to take action on importing forced labor goods. This tariff takes effect on July 24, 2026 (consistent with our previous assumption in v2.0). The exact parameters have changed from its draft version.
    • Rates vary by trading partner:
      • 10 percent, additive (17): Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, United Kingdom
      • 12.5 percent, additive (38): Algeria, Angola, Australia, Bahamas, Bahrain, Brazil, Chile, China, Colombia, Costa Rica, Dominican Republic, Egypt, Guyana, Hong Kong, Iraq, Israel, Kazakhstan, Kuwait, Libya, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Peru, Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Thailand, Turkey, United Arab Emirates, Uruguay, Venezuela, Vietnam
      • 10 percent, sliding-scale (2): European Union, Taiwan
        • Sliding-scale here means if the Most-Favored Nation rate on a variety is below 10 percent, the additional rate will be the number that brings the total rate to the 10 percent. If MFN is above 10 percent, this Section 301 tariff does not apply.
      • 12.5 percent, sliding-scale (3): Japan, South Korea, Switzerland
    • Note that all trade deal countries (either those with an implemented trade agreement: Switzerland, Japan, South Korea, European Union, Taiwan, United Kingdom; or unimplemented Agreement on Reciprocal Trade) obtained the lower 10 percent or sliding-scale rates.
    • USMCA-implicating goods are exempt. CAFTA-DR-implicating textiles and apparel are also exempt.
    • There are more than 800 general exemptions applying to all trading partners, spanning goods such as machinery, semiconductors, fuels, precious metals, foods, and pharmaceuticals.
    • Civil aircraft and goods with pharmaceutical applications are exempt for all trading partners.
    • Trade deal countries also obtained additional exemptions, such as tropical wood and plywood, cork, rattan, raw silk, live plants and bulbs, and medical/dental apparatus. Within those countries, Guatemala, El Salvador, and Jordan notably received exemptions for about 1,700 additional products; nearly all of these are textiles.
  • Section 338 tariffs on Canada for alleged discriminatory treatment of US industries, all adding an additional 50 percent (regardless of a good's compliance with USMCA). These take effect August 19, 2026.
    • The first tariff concerns the US alcohol industry and covers alcoholic beverages and related products, plus hockey equipment.
    • The second tariff concerns the US dairy industry and covers dairy and certain related confectionery goods.
    • The third tariff concerns the US auto industry and covers non-automobile goods such as wood, electronics, plastics, furniture, machinery, apparel, seeds, games, chemicals, and art.
    • There is some overlap between these tariffs and the forced labor tariff in covered product codes, but because the latter exempts USMCA goods and the overlapping goods are overwhelmingly USMCA-implicating (>90 percent), the tariffs are essentially levied on separate bases.
  • Section 301 tariff on Brazil concerning a variety of issues. This takes effect July 22, 2026.
    • The is an additional 25 percent tariff on all goods unless exempted.
    • Civil aircraft and pharmaceutical-related products are exempt, and so are goods such as petroleum, coffee, pig iron, beef, and orange juice.
    • This tariff overlaps with the Section 301 forced labor tariff for many goods and stacks on top.
• Incorporates HTS headings previously missing from the rules engine, including:
  • 9903.76.24, 9903.94.66–9903.94.69: preferential rates for Taiwanese-origin wood products (15 percent total rate) and vehicles (sliding-scale 15 percent).
  • 9903.90.08: 35 percent tariff on specific Russian products effective starting 2022. This policy was already imputed in our baseline, but no longer classified as part of the MFN rate of covered goods.
• Improves user interface for configuring non-standard tariff baselines and proposals.

Tariff Rules Engine v2.0

• Incorporates the following new policies:
  • Proposed Section 301 tariff on trading partners that allegedly fail to take action on importing forced labor goods. Rates vary by country:
    • 10% rate: Canada, Ecuador, European Union, Indonesia, Mexico, Pakistan, Argentina, Bangladesh, Cambodia, El Salvador, Guatemala, Malaysia, Taiwan, United Kingdom.
    • 12.5% rate: Algeria, Angola, Australia, Bahamas, Bahrain, Brazil, Chile, China, Colombia, Costa Rica, Dominican Republic, Egypt, Guyana, Honduras, Hong Kong, India, Iraq, Israel, Japan, Jordan, Kazakhstan, Kuwait, Libya, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Peru, Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sri Lanka, Switzerland, Thailand, Trinidad and Tobago, Turkey, United Arab Emirates, Uruguay, Venezuela, Vietnam.
    • Goods that fall into an "Annex A" are exempt from this tariff, as are goods that implicate the USMCA or CAFTA-DR trade agreements.
    • No start date has been announced, but these estimates assume the tariff begins the day after the Section 122 tariff expires. The proposed tariff is still undergoing public comment and may be subject to further changes—we'll update our estimates as the language is clarified.
  • Revised (once again) Section 232 metal tariffs, starting June 8, 2026.
    • Steel mobile equipment (e.g., forklifts and tractors), previously considered half steel derivatives, is temporarily dutied at preferential rates.
    • Steel mobile equipment used for industrial purposes is tariffed at a sliding-scale 15 percent (if from a trading partner with normal trading relations).
    • Equipment not meeting that criterion is subject to a flat 15 percent if from Argentina, Ecuador, El Salvador, the European Union, Guatemala, Japan, South Korea, Liechtenstein, Switzerland, Taiwan, or the United Kingdom. If from Canada or Mexico, up to 40 percent of the import's value is exempt if USMCA-implicating, with the remaining value facing a 25 percent tariff.
    • Steel mobile equipment falling into neither group still faces a 25 percent tariff.
    • Steel mobile equipment used for motorcycle manufacturing is exempt from the above rates.
    • Certain other aluminum and steel half derivatives now face the preferential sliding-scale 15 percent rate.
• Transitions to USITC import data from 2025 and USMCA data from July to December 2025.
• Fixes UK preferential rates being applied to non-UK metal varieties.

Tariff Revenue Model v3.0

• Uses CBO's 2026 baseline for projecting imports.
• Imputes imports under pre-2025 policies through 2036.

Tariff Rules Engine v1.6

• Incorporates the following new policies:
  • Revised Section 232 metal tariffs, which encompasses steel, aluminum, and copper, starting April 6, 2026.
    • The rate on raw steel, aluminum, and copper (and their "full" derivatives, e.g., aluminum doors) remain at 50 percent.
    • Derivative products that partially contain the metals are no longer levied based on the value of their metal content. In lieu, a list of "half" derivatives (e.g., air-conditioner parts) are levied at a rate of 25 percent.
    • UK-origin imports face preferential rates: raw metals and full derivatives are levied at 25 percent, while half derivatives are levied at 15 percent.
    • Half derivatives that are used for motorcycle manufacturing are exempt from these tariffs.
    • A subset of half derivatives (e.g., loading machines) will face a sliding-scale 15 percent rate. That means if its MFN rate is below 15 percent, the additional tariff will make up the difference; if above, no additional tariff applies. This treatment lasts through 2027, after which these half derivatives will be levied at 25 percent. For countries without normal trading relations (i.e., Belarus, Cuba, North Korea, and Russia), this preferential rate will be 25 percent.
    • Further preferential rates apply to derivatives if they are produced with US-origin metals. TPC does not model these provisions due to a lack of data. If importers comply with these conditions, we expect further revenue loss from these new metal tariffs.
    • The rate on Russian-origin aluminum remains at 200 percent; derivatives are levied using the previous Section 232 aluminum tariff regime.
  • New Section 232 pharmaceutical tariffs:
    • Patented pharmaceuticals face sliding-scale 100 percent rate. (This rate does not apply to countries without normal trading relations to the US.) The most imported covered products include peptides, vaccines, sedatives, and insulin.
    • For trading partners with implemented trade deals (i.e., European Union, Japan, South Korea, and Switzerland and Liechtenstein), the rate will be a sliding-scale 15 percent. For the UK specifically, it is 10 percent.
    • Products of drug manufacturers that have signed both a reshoring deal and a so-called Most-Favored Nation (MFN) pricing deal are exempt from tariffs. ("MFN pricing" is unrelated to MFN tariffs.) TPC models the share of imported drugs covered using the global market share of these manufacturers. This treatment is in effect through January 19, 2029.
    • If a drug manufacturer has signed a reshoring deal only (there appears to be one company for which this applies, Regeneron), then a preferential 20 percent rate applies. After the previous exemption ends, imports made by other signatories will face this treatment. This treatment lasts through April 2, 2030, after which the 100 percent rate applies.
    • If multiple rates apply, the proclamation instructs that the lowest one be levied. Thus, the 100 percent and 20 percent provisions are never binding for imports from the aforementioned trade deal countries.
    • Both generic drugs and an "Annex IV" drug list (e.g., antibody tests, antidepressants) will face a rate of 0 percent. Products that face a Section 232 tariff (even at 0 percent) are exempt from Section 122 tariffs. (Annex IV significantly overlaps with the "Annex II" list that defines goods exempted from Section 122 tariffs.)
    • The start date for these policies is not entirely clear across documents. TPC follows the language in the president's proclamation and assumes company-specific provisions take effect first. Specifically, we assume headings 9903.04.61, 9903.04.63, and 9903.04.64 take effect on July 31, 2026 and apply to the 17 drug manufacturers with deals. We assume exemptions for generics and Annex IV take effect at the same time. Since heading 9903.04.61 applies no additional tariff rate, we assume this heading supersedes 9903.04.63 and 9903.04.64 until it expires on September 29, 2026, when other rate-applying headings also take effect. In effect, rates on pharmaceuticals do not increase until September 29, 2026. We will update our estimates as the language is clarified.
• Fixes a 200 percent tariff on Russian aluminum that did not apply for an interval in 2025-26.
• Significantly improves computational speed (by about 10x) with memoization of tariff rates on days with policy changes.

Tariff Rules Engine v1.5

• Disables the unimplemented Agreements on Reciprocal Trade with Argentina, Bangladesh, El Salvador, Guatemala, Indonesia, Malaysia, and Taiwan. This change slightly increases pre-ruling tariff levels.

Tariff Rules Engine v1.4

• Incorporates the following new policies:
  • Overturning of all IEEPA tariffs starting February 20, 2026.
  • Section 122 tariff of 10 percent on all goods, except exempted goods, from February 24 through July 23, 2026. Section 122 tariffs do not apply to goods in "Annex II" of the associated order, goods under Section 232 tariffs, informational materials, Chapter 98 goods, and goods implicating the United States-Mexico-Canada Agreement (USMCA) or Dominican Republic-Central America Free Trade Agreement (CAFTA-DR).
  • Trade agreements with Argentina, Bangladesh, El Salvador, Guatemala, and Indonesia that would have reduced the now-overturned reciprocal IEEPA tariffs.
  • The termination (starting February 7, 2026) of India's IEEPA tariff relating to the import of Russian oil.

Tariff Rules Engine v1.3

• Incorporates the following new policies:
  • The Section 232 tariff on semiconductors intended for re-export (HTS heading 9903.79.01). It takes effect on January 15, 2026.
• Improves the handling of interactions when a tariff applies only partially. This fixes an issue of the "Annex II" list (9903.01.32) not applying to European patented pharmaceuticals.
• No longer exempts goods under Section 232 investigation from reciprocal tariffs, unless they are added into Annex II.

Tariff Rules Engine v1.2

• Incorporates the following new policies:
  • The “Tariff-Related Elements of the Framework for a United States-Switzerland-Liechtenstein Agreement on Fair, Balanced, and Reciprocal Trade,” whose details were released on December 18, 2025. The policy retroactively applies to imports since November 14, 2025.
  • The scheduled increase of Section 232 tariffs on upholstered wooden furniture and wooden cabinets is delayed till 2027.
  • Section 301 tariffs on most Nicaraguan-origin imports (starting 2027) that do not implicate the Dominican Republic-Central America Free Trade Agreement.
• Improves the treatment of patented pharmaceutical imports when their generic counterpart is not subject to reciprocal tariffs.

Tariff Rules Engine v1.1

• Incorporates the U.S.-Korea Strategic Trade and Investment Deal, whose details were released on December 4, 2025. The policy retroactively applies to imports since November 14, 2025.
• Adds support for:
  • Section 201 tariffs on solar cells and modules.
  • Section 301 exclusions under HTS heading 9903.88.70.
  • IEEPA exceptions under 9903.01.86 for India.
  • IEEPA exceptions to informational materials.
• Applies exceptions under HTS heading 9903.02.76 to Section 232 aluminum, steel, and copper tariffs.
• Includes eight previously unaccounted product codes for steel and aluminum tariffs.
• Improves rate aggregation for fiscal year 2027.