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Trump 2.0 Tariffs: What Cost for the World Economy?

Author

Listed:
  • Antoine Bouët
  • Leysa Maty Sall
  • Yu Zheng

Abstract

This Policy Brief conducts an ex-ante evaluation of Donald Trump’s protectionist proposal, an increase by 10 percentage points of tariffs on all goods from all origins, except Canada and Mexico, combined with 60 percentage points of tariffs on all goods from China. US partners retaliate. World GDP declines by 0.5%, with sharp contraction in the US (-1.3%) and China (-1.3%), limited negative impact in France and Germany, and significantly positive effects on Canada and Mexico. Trade between the US and China becomes almost decoupled; US wages fall while Mexican wages rise. Trade retaliation not only punishes the US, but also allows some countries to reduce their losses in terms of trade and economic activity. Most US trading partners benefit from a more protectionist US trade policy against China.

Suggested Citation

  • Antoine Bouët & Leysa Maty Sall & Yu Zheng, 2024. "Trump 2.0 Tariffs: What Cost for the World Economy?," CEPII Policy Brief 2024-49, CEPII research center.
    • Handle: RePEc:cii:cepipb:2024-49
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    File URL: http://www.cepii.fr/PDF_PUB/pb/2024/pb2024-49.pdf
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    More about this item

    Keywords

    Tariffs; Trump; Trade war; Trade;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General

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