Global | Tariffs: a self-inflicted wound

Summary

The tariff hikes being pushed through by the United States since the start of Donald Trump's second term are genuinely unprecedented. Not in the last century have we witnessed such a sudden and erratic shift in trade policiy implemented within such a short space of time.

Key points

• Key points:
• The uniqueness of the changes and the unpredictability of the decision-making process have generated a prevailing sense of uncertainty comparable to that seen during the onset of the coronavirus pandemic.
• Simulations suggest that global trade could shrink by around 4% in the coming years, with more than 10% falls in U.S. export and import flows.
• The impact on global GDP would be between two and five tenths of a percentage point in the short run, which could increase further on a longer term horizon.
• Although the main trading partners of the United States will surely feel the burn, the hardest hit will likely be the U.S. economy itself.

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