• Fed Governor Christopher Waller states new tariffs act as a tax, directly curbing 2025 economic growth.
  • Fresh 50% duties on imports from India are projected to reduce real GDP growth by 0.5 percentage points this year and next.
  • Households are expected to face an average income loss of $2,400 this year, with unemployment forecast to rise.

Federal Reserve Governor Christopher Waller has added his significant voice to a chorus of economic concern, stating plainly that recent tariff increases are a tax on the U.S. economy that will materially slow its growth this year. His comments, delivered Wednesday, align with newly released analyses showing the policies implemented by the Trump Administration are beginning to bite.

The most immediate drag comes from a fresh round of tariffs, including a 50% rate on imports from India enacted in August 2025. According to economic models, these measures are now forecast to shave 0.5 percentage points off U.S. real GDP growth in both 2025 and 2026. The national unemployment rate is expected to be 0.3 percentage points higher through 2025 as a direct result, with payroll employment declining by more than half a million jobs.

“You can’t divorce the policy from its economic effect,” Waller said, according to people familiar with his remarks. “It functions as a levy that consumers and businesses ultimately pay.”

The Penn Wharton Budget Model estimates the average household will see an income loss of approximately $2,400 in 2025 dollars after accounting for the tariff-induced price increases. While certain sectors like manufacturing may see long-term output expand, these gains are more than offset by sharp contractions in construction and agriculture.

The administration has defended the tariffs as a necessary tool for reshaping global trade dynamics and protecting American industries. However, the economic data suggests the costs are substantial and widespread. Retaliatory measures from trading partners are already amplifying the pain, contributing to a projected 16.1% long-run decline in U.S. exports.

Efforts to reach a spokesperson for comment on Waller’s remarks were not immediately successful.

The long-term outlook is notably grim. Analyses project the U.S. economy will be about 0.4% smaller annually because of the tariffs, a loss of roughly $125 billion. If the policies remain in place indefinitely, as is the current assumption, all future households are expected to be worse off, with middle-income families facing a potential lifetime income loss of $22,000.

Correction: An earlier version of this article misstated the long-term GDP impact. The economy is projected to be 0.4% smaller annually, not cumulatively.