Trade agreement compliance softened the 2025 tariff hit to prices

Greater use of duty-free trade channels under the North American trade agreement reduced the effective tariff burden on U.S. imports in the fourth quarter of 2025, according to a Dallas Federal Reserve analysis. About 80% of imports from Mexico and Canada entered duty-free under the agreement, roughly 1 percentage point more than in a comparison scenario based on 2024 compliance levels.

The shift lowered the estimated U.S. price-level impact by about 9 basis points, or 0.09 percentage points, including for core prices. The effect was larger for goods, particularly durable goods such as electronics, appliances and household equipment, which contain more imported content than services.

Read the full story at Federal Reserve Bank of Dallas.