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Understanding the Global Repercussion of Trump's Tariffs

Trump’s tariffs promise protection but risk economic fallout. Moody’s predicts GDP drops of 1.04% by 2025 and 3.45% by 2027. Expect higher prices, trade wars, and global instability—ripples that could shake both U.S. households and international economies.

Understanding the Global Repercussion of Trump's Tariffs
Photo by Pau Casals / Unsplash
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President-elect Donald Trump’s proposed tariffs, including a 10% universal and 60% on Chinese goods, aim to reshape U.S. trade but risk significant costs. Households could face annual increases of $1.7k–$3.9k, with lower-income families hit hardest. Tariffs may inflate prices, disrupt supply chains, and prompt international retaliation. GDP is projected to shrink 1–3.5% over three years, and revenues from tariffs, estimated at $3 trillion over a decade, fall short of replacing income taxes.

Multiple Consequences of Trump's Tariffs

  • President-elect Donald Trump is gearing up to slap aggressive tariffs on imports, and with the GOP in control of Congress, these proposals will likely glide through. While the exact details are still murky, expect a universal baseline tariff of 10-20% on all imports—and a jaw-dropping 60-100% tariff on Chinese goods.

  • The plan is to (1) shield American industries, (2) tackle trade deficits, (3) counteract unfair practices, (4) bring back jobs, and (5) pump up government revenue. Unsurprisingly, this aligns perfectly with Trump’s “America First” mantra and his promise to “Make America Great Again.”

  • These tariffs could spark some serious turbulence. Think higher prices on everyday goods (ouch, middle class!), potential job losses, and a brewing cocktail of trade wars. The fallout? Shaky geopolitics and a wobbly global financial system.

  • Numbers don’t lie, and the predictions are grim. Moody’s forecasts a real GDP drop of 1.04% by 2025, plunging further to 3.45% by 2027 if a 10% universal tariff and retaliatory measures take effect. EY paints a similar picture, with GDP sliding 1.18% in 2025 and 2.23% by 2026 under the same conditions. Buckle up—it’s going to be a bumpy ride.

  • In this report, we will demonstrate the negative effects of Trump’s tariffs. From shrinking the purchasing power of U.S. households to destabilizing international economies reliant on U.S. exports, the ripple effects will be significant. Retaliatory measures will further escalate the damage, and Trump’s idea of replacing income taxes with tariffs is little more than a pipe dream.

Sources: Grantham Research Institute, Tax Foundation

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