The overall US effective tariff rate is now estimated at 12.7%, down from 13.6% estimated in November 2025, according to the agency’s revised Effective Tariff Rate Monitor published on 5 February 2026. The drop reflects a lower combined tariff rate on Indian imports, from 50% to 18%, alongside lower tariffs on Switzerland and revised effective tariff rate estimates for Canada and Mexico.

The shift looks modest, but the underlying message is bigger: tariffs are re-routing trade rather than shrinking it, with consequences for European firms competing for US demand and for European supply chains built around globally traded components.

Selective tariff cuts

Fitch highlighted a new US trade deal with India, announced on 2 February 2026, that cut the reciprocal tariff on Indian goods to 18% from 25%, effective immediately. Reports also indicated a separate 25% penalty tariff linked to India’s purchases of Russian oil would be lifted. On Fitch’s calculations, India’s effective tariff rate fell to 15.6% from 35.2%.

A separate framework covering Switzerland and Liechtenstein, effective 14 November 2025, set a 15% reciprocal tariff rate, replacing the previous 39%. Fitch estimates Switzerland’s effective tariff rate has since dropped to 6.1% from 14.6%.

Canada and Mexico also moved lower on Fitch’s estimates, with Canada falling to 4.6% from 5.9% and Mexico to 5.4% from 5.8%. The agency attributed the revision to updated customs data through November 2025 showing that, on average, about 84% of imports from Mexico and about 88% of imports from Canada entered the US duty-free between September and November. Fitch now assumes 80% of goods imports from Mexico and 85% of goods imports from Canada will be duty-free under the current tariff regime, versus an earlier assumption of 75%.

Trade diversion accelerates away from China

Fitch’s update also incorporates fresh data on import flows by country through November 2025. China’s elevated effective tariff rate has coincided with a sharp fall in imports, down roughly 45% in November 2025 compared with 2024.

China’s share of total US imports fell to about 8.0% in November 2025 from around 13.4% at the end of 2024. Fitch linked the decline to rising shares for Vietnam and Taiwan, where effective tariff rates are 12.7% and 3.5% respectively. Vietnam’s share rose to around 6.5% in November 2025, while Taiwan’s climbed to about 7.7% from about 3.6% over the same period.

In volume terms, Fitch estimates imports from Vietnam jumped 42% and imports from Taiwan surged 118%, driven largely by chip imports tied to the artificial intelligence investment boom.

Monthly customs data also show how quickly the picture can change. Fitch calculates the actual effective tariff rate on all US goods imports fell to 9.8% in November 2025 from 11.0% in October, mainly because the tariff rate on imports from China dropped to 31% from 37% month on month. Even after the decline, China still carried the highest actual effective tariff rate among major US trading partners, on Fitch’s reading.

Why it matters for Europe

For Europe, the point is not simply that US tariffs have eased at the margin, but that access to the US market is being reshaped through bilateral tweaks and fast-moving supply chain shifts.

Trade diversion intensifies competition. If US buyers continue to replace Chinese suppliers with producers in Vietnam and Taiwan, European exporters could face tougher price competition in categories where Asian manufacturing has scale advantages, while demand patterns shift across intermediate goods.

Supply chain exposure also becomes more complicated. Fitch linked Taiwan’s surge largely to semiconductors tied to the AI investment boom. Europe’s industrial base depends on those components, so shifts in US import demand can feed through into availability, pricing and delivery times for European manufacturers.

Selective tariff cuts can also tilt the playing field in Europe’s neighbourhood. Switzerland’s estimated effective tariff rate falling to 6.1% from 14.6% matters in high-value sectors where Swiss firms are strong and closely linked to European production networks, potentially sharpening competition for EU-based peers while creating opportunities for some suppliers.

Finally, the persistence of the US trade deficit suggests tariffs are changing routes more than reducing demand. Fitch puts the US trade deficit at roughly $1trn on an annualised basis, with little change over the past five years, aside from a spike in imports after the “Liberation Day” tariff announcement in April 2025.

What to watch next

For European businesses, the key question is whether these adjustments mark the start of a broader recalibration or simply more evidence of a fragmented, deal-by-deal tariff regime. On Fitch’s numbers, the direction of travel points to a more fluid tariff landscape where changes in one corridor show up quickly as shifts in volumes elsewhere.

That volatility creates a practical challenge for Europe: planning production, pricing and investment becomes harder when US tariff conditions, and the trade flows they trigger, can shift materially within months.