US trade war

Q2 2025 US Economic Outlook

Scaled-back tariffs not an existential threat

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The impact on real GDP from Trump’s tariffs will depend crucially on whether (and how quickly) the customs duties raised are recycled back into the economy as new tax cuts. We assume most, if not all, of the revenue is returned to households in the upcoming budget reconciliation. Failure to do so would represent a significant fiscal tightening that could tip the economy into recession.
Paul Ashworth
Paul Ashworth
Chief North America Economist

The latest edition of this quarterly report assesses the profound implications for the US economy of Donald Trump's tariffs roll-out. It addresses key economic and policy issues, including:

  • How our assumptions for tariff levels mean US growth will slow sharply, though a recession will be avoided;  
  • How an environment of lower growth and higher inflation has shifted the Federal Reserve's calculus;
  • The risks to economic growth if the revenues from higher tariffs aren't recycled into tax cuts.  

Download a complimentary copy of this report now to understand how the US economy will fare in this pivotal moment. 

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Our US Economics coverage provides detailed analysis and independent forecasts for the US economy and financial markets, offering both rapid responses to new data and developments, and more in-depth coverage of key themes, current trends, and future developments.

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