📉 Economic Growth and Employment

GDP and Wages: The Penn Wharton Budget Model projects that Trump's tariffs could reduce the U.S. long-run GDP by approximately 6% and wages by 5%, translating to a $22,000 lifetime loss for a middle-income household.

Employment: The Yale Budget Lab estimates that the 2025 tariffs, along with foreign retaliation, may lower U.S. real GDP growth by 1.1 percentage points in 2025 and result in 740,000 fewer jobs by the end of the year.

💸 Consumer Prices and Inflation

Apparel Prices: Tariffs have disproportionately affected clothing and textiles, with consumers facing a 64% increase in apparel prices in the short term and a 27% increase in the long term.

Inflation Concerns: The Federal Reserve has expressed concerns that tariffs could lead to persistent inflation, as businesses are likely to pass increased costs onto consumers.

🏭 Manufacturing and Trade

Reshoring Efforts: While there has been some movement to bring manufacturing back to the U.S., Bank of America reports that reshoring has peaked, with new production increasingly shifting to countries like Vietnam, Mexico, India, and Thailand.

Trade Deficit: Despite the tariffs, the U.S. trade deficit has increased, as businesses shifted imports to other countries to avoid tariffs, leading to a 21% increase in the goods deficit from 2016 to a record high.

📊 Business Uncertainty and Market Reactions

Corporate Guidance: Numerous major corporations, including Macy's, General Motors, and UPS, have scaled back or withdrawn their financial guidance for 2025 due to tariff-related uncertainties.

Stock Market Volatility: The announcement of sweeping tariffs in April 2025 led to a significant stock market crash, with global markets experiencing the largest decline since the 2020 COVID-19 pandemic-induced crash.

💰 Fiscal Impact

Revenue Generation: Trump's tariffs are projected to increase federal tax revenues by $152.7 billion in 2025, making them the largest tax hike since 1993.

Long-Term Effects: A 15 percentage point increase in universal U.S. tariffs could generate $3.9 trillion in federal revenue over a decade, though this would be partially offset by slower economic growth and lower tax revenues from households and companies.

🌍 Global Implications

International Economies: Canada's economy has been particularly affected, with a projected long-run reduction of 2.2% in real terms due to U.S. tariffs and Canadian retaliation. China's economy is also expected to be 0.6% smaller in the long run.

European Union: The EU faces significant but manageable macroeconomic consequences from Trump's tariffs, with concerns over trade diversion from China being likely exaggerated.

In summary, while the tariffs aimed to bolster domestic industries and reduce trade deficits, they have led to increased consumer prices, economic uncertainty, and global market disruptions. The long-term effectiveness of these tariffs in achieving their intended goals r

emains a subject of debate among economists and policymakers.