President Donald Trump’s tariffs are taking shape—and they’re taking on a kind of color, too. If you look at the tariffs and assign different colors to each sector they touch, they start to look like a collection of different stones, even stained glass. They’re turning into a “mosaic.” That’s the metaphor used by Monica Guerra, head of US Policy at Morgan Stanley Wealth Management.
This is because they vary on both a country-by-country and a product-specific basis, even though Trump has ensured they are far-reaching in scope. This makes the overall impact “more idiosyncratic,” Guerra wrote in a research note titled, “Tariff Talk and Dollar Moves.”
For example, Guerra noted 21% of global U.S. imports are exempted, whereas 30% of U.S. imports from the EU, 42% from Vietnam, and 64% from Malaysia are exempt. Then, reciprocal tariffs apply to 50% of goods imported from Japan and 30% from South Korea, and those are impacted by tariffs on autos and auto parts. These tariffs are being applied “piecemeal,” with delayed starts, occasional backtracks, and new deals being struck.
Guerra warned of unpredictable impacts across the global economy and projected tariff rates are likely to keep rising and remain elevated, even as the Trump administration weathers questions about their legality. Guerra’s team also made a projection, calculated based off tariff collections over the last three months: The U.S. Treasury could collect as much as $2.7 trillion in tariffs over the next 10 years.
From blanket tariffs to a more patchwork policy
Since his return to office, President Trump has deployed a complex array of country-specific and product-targeted tariffs. According to Guerra’s analysis, the average effective tariff rate on imports has been around 16% in 2025—five times higher than the 3% average when Trump took office in January.
Though the White House originally attempted sweeping, universal tariffs—including a 10% blanket rate—the policy has grown more piecemeal due to both legal challenges and strategic considerations. While overall tariffs have risen, the effects are far from uniform.
The granular nature of U.S. trade policy under Trump is apparent in the varying exemptions granted to different trading partners. Morgan Stanley noted the sharp departure from the blanket tariffs of previous periods, making the market’s assessment of winners and losers more challenging.
Macroeconomic implications: Dollar weakness and inflation risks
Compounding the uncertainty is a significant weakness in the U.S. dollar, Morgan Stanley noted, which has dropped 10% year-to-date, making imports more expensive for American consumers and companies. Guerra’s team warned the combination of a weaker dollar and rising tariffs could translate directly into higher import prices, fueling inflation and potentially squeezing corporate margins unless costs are passed on to consumers.
While inflation had shown some signs of moderating—helped in part by lower energy prices and inventory build-ups ahead of new tariffs—markets are now pricing in a rebound: Inflation expectations for the next 12 months have climbed to 3.43%, according to zero-coupon swaps, roughly matching the levels seen in April, when Trump announced his tariff plans in more detail as part of “Liberation Day.”
Revenues rise—but at what cost?
Behind the policy maneuvering lies a powerful fiscal incentive. Since the onset of Trump’s latest round of reciprocal and universal tariffs this spring, monthly tariff revenues have soared to an average of $22.3 billion—an all-time high compared to the typical $5 billion per month average for the previous five years. This is the average related to the $2.7 trillion projection, but strategists caution tariff rates and compliance remain highly dynamic and unpredictable, making any long-term projection subject to “considerable uncertainty.”
As the U.S. doubles down on tariffs while navigating currency volatility, the effects will be anything but homogeneous. The technology sector, uniquely positioned with nearly 58% foreign revenue exposure, could stand to benefit from dollar weakness, even as other sectors face margin pressure from rising costs. Meanwhile, small and mid-sized firms, as well as those reliant on complex global supply chains, may struggle with operational and pricing challenges that are still rippling through the economy.
Morgan Stanley said the current environment is “particularly fluid and dynamic” as legal and political battles over trade continue to play out. As Trump’s tariff regime grows more intricate, markets, businesses, and consumers alike are bracing for an era of heightened unpredictability—and potentially, record-shattering government revenue, paid for by American consumers through higher tariffs.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
This story was originally featured on Fortune.com
