Impact of Recent Tariffs on US Economy
President Trump has announced a range of tariffs on major trade partners like China, Mexico, and Canada. China has responded with their own tariffs on imports from the US. These tariffs will negatively impact every economy involved.
Key Takeaways
The table below shows two scenarios with one representing if China does not impose any tariffs on US goods and one showcasing them imposing tariffs in retaliation to Trump’s actions. As you can see, if both countries impose tariffs on each other, the US GDP is projected to decrease by 0.07% by 2027 while China’s GDP decreases by 0.16%.
When speaking in terms of money, the US GDP would be reduced by $55 billion over the next 4 years while China’s GDP will reduce by $128 billion over the same period.
According to the PIIE, these tariffs could also result in higher short-term inflation in both countries. If a trade war is started, this could lead to massive job losses in the export economies of both countries. This only further showcases the negative effects these tariffs will have for the US and other countries involved.
Attached here is the graph below showcasing the direct GDP impact of Trump’s tariffs.
The table below shows one scenario where China imposes tariffs on US goods and one scenario where China does not impose tariffs and the effects of both of these scenarios on GDP.
