President Trump’s trade war has created material downside risks for the global economy. Our forecasts assume that tariffs on most countries outside China will stay at 10% and retaliation by other governments will be moderate. In this scenario, global GDP would be about 0.4% lower in two years’ time than in a pre-tariff baseline. However, if deals aren’t reached, pauses expire, and the US partially reverts to its Liberation Day tariffs while maintaining ~145% tariffs on China, then the hit to global GDP would be closer to 1%. This would be roughly equivalent to the global damage resulting from the euro-zone crisis.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services