President Donald Trump is making his return to the Group of Seven this weekend having taken the global economy on a roller-coaster ride toward a singular destination: A world in which he is the ultimate arbiter of trade, security and power relationships, and America harvests the economic benefits.
As he does so, US tariffs are meeting growing opposition at home and abroad. From G-7 host Canada to China and the European Union, major US trading partners are mounting a firmer resistance than they did during his first term. US courts are threatening to invalidate many of the duties altogether.
The US economy faces the prospect of a summer of rising prices, slowing hiring and consumer discontent. Tariff threats are now near-daily market movers, this week sending the dollar tumbling even after the US and China brokered a tentative trade truce.
Trump’s bid to upend the global trading system started in January 2017 when in his first few days in office, he abandoned the Trans-Pacific Partnership negotiated by the Obama administration. With that, he ripped up a carefully constructed 12-nation economic alliance designed to help contain China and rewrite global trade rules in America’s favor, instead launching the US toward greater protectionism.
Trump at the 2018 G-7 Leaders SummitPhotographer: Cole Burston/Bloomberg
That move has come with economic costs. By 2030, Bloomberg Economics forecasts, if Trump’s current tariff regime endures, the global economy will be $1 trillion smaller than it would have been had the US remained in the TPP. More than a third of that loss would come because of a smaller US economy, the analysis finds, with the US share of global trade tumbling even as China’s stays steady. The consequence for Americans: 690,000 fewer jobs.
Tariff Shock
World economy in 2030 may be $1 trillion smaller with Trump’s tariffs than it would have been had the US joined the Trans-Pacific Partnership
Source: Bloomberg Economics
Note: Baseline assumes no TPP and no tariff hikes. Estimates from CGE model, applied to IMF GDP projections for 2030 (current USD)
As the G-7 leaders gather for their summit—on what is the 10th anniversary of the famous 2015 trip down the Trump Tower escalator that launched Trump’s first presidential campaign—that’s a pertinent reminder of the high cost of trade wars.
Three other members of the G-7 (Canada, Japan and the United Kingdom) are now also part of the TPP’s successor, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Four of them (France, Germany, Italy and the UK) were parties in separate trans-Atlantic negotiations that Trump also abandoned.
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For Trump—and many who voted for him—the costs of this realignment are overstated. And even if they’re not, they’re a price worth paying for reorienting a global trade system they view as fundamentally unfair to the US and reviving a manufacturing base that years of globalization have hollowed out. The administration is also claiming victories in emerging truces and other preliminary deals with China and the UK and promising more to come.
“Only Donald Trump understood American membership in the globalist-conceived TPP would have led to the complete offshoring of America’s auto industry to Japan, Vietnam, and broader Asia along with a massive hit to our manufacturing base,” Peter Navarro, a senior White House trade adviser, said in response to questions for this article. He also questioned the credibility of the Bloomberg Economics analysis, saying that past predictions of a severe impact from tariffs had not materialized.
Crying over lost economic output may not be a constructive exercise for the G-7 leaders. Neither may be confronting Trump—consensus is so hard to reach these days that this G-7 summit has scrapped the normal joint communique. But the Bloomberg Economics analysis adds to a growing pile of studies that have pointed to the cost of tariffs for the global economy.
The trade shock is already hurting global growth, with the US among the hardest hit. The World Bank this week slashed its global growth forecast, following the Paris-based Organization for Economic Cooperation and Development and the International Monetary Fund. The OECD recently predicted the US would grow by just 1.6% in 2025, a sharp drop from 2.8% in 2024, with Trump’s tariffs bearing much of the responsibility.
The free-trade consensus against which Trump has fired his battery of tariffs is credited with keeping global growth buoyant and inflation low. Beneath that positive headline, though, not everyone enjoyed the benefits. Free trade was good for bosses who could shift production from the US to lower cost locations like China and Mexico and for consumers who benefited from cheaper products, but bad for US factory workers who saw their jobs shipped overseas.
For some in manufacturing, the TPP was flawed from the start. The agreement needed to be more worker-centric and failed to tackle non-tariff barriers, such as undervalued exchange rates, according to Scott Paul, who heads the Alliance for American Manufacturing, a partnership of the steelworkers union and manufacturers, and served on Trump’s first-term manufacturing council.
“Even at the time, no one argued this was a slam dunk for US manufacturing,” he said.
More Factory Workers, Fewer Services Jobs
Trump’s tariffs promise to add manufacturing jobs but may cause a greater loss of employment in the service sector
Source: Bloomberg Economics
Note: Impacts by 2030, estimated using a CGE model against a baseline assuming no TPP, no tariff hikes
Trump’s tariffs attempt to redress that imbalance. The Bloomberg Economics analysis shows the costs and benefits of doing so. As foreign goods become more expensive, US-based manufacturers are likely to benefit, boosting factory jobs—notably in steel, autos and textiles—with a total of 1.2 million created by 2030. If that happens, it would deliver one of Trump’s main goals—restoring some of the lost vitality of US manufacturing.
Read More: GM Dodges Tariffs With Production Shift to US From Mexico
As factory workers benefit, though, 1.6 million jobs are at risk in the service sector relative to what would have happened if no tariffs were added — a reflection of overall slower growth and lost competitiveness.
The impact of the TPP on US employment would likely have been positive but modest. Bloomberg Economics modeling suggests services and, to a lesser extent, manufacturing would both have benefited. Other studies—including from the Peterson Institute for International Economics— pointed to the risks of small losses in the manufacturing sector, offset by gains in services.
A production line at a Ford Motor Company factory in Dearborn, MichiganPhotographer: Jeff Kowalsky/AFP
Jobs aren’t the only thing at stake as tariffs rise. The US role as a major economic partner for most countries and Washington’s influence over the global economic agenda also face a blow. Bloomberg Economics’ modeling shows that while the TPP would have helped stabilize the relative weights of the US and China in global trade flows, Trump’s tariffs risk cutting the US share to 16% from 22%.
The risks are particularly evident in Asia, where China is already the largest trading partner for most countries. Trade with China now accounts for 23% of all imports and exports of TPP countries located in Asia or Oceania, compared with only 13% for the US. Trump’s tariffs could widen this gap by lowering the US share to only 11%, while the TPP could have slightly boosted US trade and lowered China’s share to 21% instead.
Weaker Ties
US trade with Asia will be weaker under Trump tariffs than it would have been in the Trans-Pacific Partnership
Source: Bloomberg Economics
Note: Includes the following TPP members: Australia, Brunei, Japan, Malaysia, New Zealand, Singapore, Vietnam. Shows the share of total trade in goods for those countries with either the US or China. Data from IMF DOTS up to 2024, projected using CGE results.
Trump’s move to drop out of the TPP wasn’t in isolation. The agreement in 2016 faced opposition from Democratic lawmakers and candidates, including Hillary Clinton. Major trade unions fought it, and some US companies including Ford Motor Co. had reservations.
In a recognition of the toxic US domestic politics around the TPP, former President Joe Biden also didn’t move to rejoin it after his election in 2020.
Michael Froman, who as former President Barack Obama’s US trade representative led the negotiation of the TPP, argues the consequences of Trump’s withdrawal go far beyond economics to broader strategic relationships in the Asia-Pacific today.
“Trade is absolutely central and front of mind to everyone in that region” and China’s growing dominance in the sphere led many in the region to pursue an alternative to the model Beijing was offering, said Froman, who now leads the Council on Foreign Relations. He argues pulling out of TPP “was one of the most significant strategic blunders in recent American history” because it “left the field to China.”
The goal of the TPP wasn’t just opening up Japan and other markets to US exports, Froman said. It was also about forcing an update in global trading rules that could deal with China’s rise and issues like the conduct of Beijing’s state-owned enterprises and industrial subsidies. That, too, would be relevant today as the US and its G-7 allies are confronting new effects of China’s rise including its dominance in sectors like electric vehicles.
The TPP “would have forced a different kind of conversation with China,” Froman said. “Because they would be dealing now with an ever-increasing percentage of the global economy that agreed that the way China was managing their SOEs and subsidization and intellectual property was unacceptable.”
Gantry cranes and shipping containers at the Yangshan Deepwater Port in ShanghaiPhotographer: Qilai Shen/Bloomberg
Many of the gripes about trade barriers that the Trump administration is airing now in talks were also addressed in the TPP negotiations concluded in 2015, said Wendy Cutler, a veteran US trade negotiator who oversaw the TPP talks as deputy US trade representative. Which means the US is litigating trade battles it arguably won a decade ago.
As Trump races to close deals with other major Asian economies like India, Japan and South Korea, the larger cost for the US of not being in the TPP may be a loss of trust among those allies.
Pulling out of the TPP “really discredited the United States,” said Cutler, who now leads the Washington office of the Asia Society Policy Institute. “It has broken trust with a lot of partners who remain skeptical about negotiating with the United States because I don't think they have any confidence that we’re going to stick to, or stay in, these agreements.”
Trump’s current administration, like his first, has focused much of its ire at China. Treasury Secretary Scott Bessent, who led a new round of negotiations with senior Chinese officials in London this week, has raised the possibility of new agreements with allies leading to collective action aimed at what he describes as the unbalanced export-dependent Chinese economy.
Yet Trump’s tariffs are also hitting the economies of many US allies who have their own relationships with China. Trading partners like Canada are confronting the possibility of imminent recessions as exports tumble. Japan and Germany face existential threats to their iconic auto sectors.
Tractor trailers and vehicles cross the Peace Bridge at the Canada-United States border in Fort Erie, Ontario, CanadaPhotographer: Christopher Katsarov Luna/Bloomberg
"This is a multi-step process, our allies have also taken advantage of us," Bessent said at a Senate Finance Committee hearing Thursday. "Get fair trade with our allies and then we can worry about China."
The consequences of Trump’s TPP withdrawal are still evident in allies’ changing attitudes eight years on.
Kenichi Kawasaki, a former senior economist in the Japanese Cabinet Office, said the TPP has benefited Japan economically, as have other trade agreements. But like other G-7 economies, it’s facing a global economy in which US tariffs are threatening major disruptions even as US leadership is in retreat.
In a sign of how things have changed, Kawasaki is now a proponent of letting China join the successor of the TPP. In a 2023 study, Kawasaki found that the benefits to real GDP of Chinese accession for other CPTPP members as a group would be twice as large as having the US join.
In Canada, a founding member of the CPTPP, the pact is of growing interest as the US neighbor weighs the impact of tariffs and the need to diversify its economy away from its dependence on American demand.
"The trade war shock of Trump 2.0 in Canada is immense,” said Yves Tiberghien, a political science professor at the University of British Columbia.
As a result, he said, “the name of the game is diversification” for Canada as it negotiates with a US government it no longer trusts. “There is a huge incentive now for the government and private sector to search for alternatives and there are only two directions: Asia and Europe. With Asia, the starting point is CPTPP.”
Being in the CPTPP has allowed Mexico to diversify its exports to other high-income countries like Japan, Australia or New Zealand.
That’s useful at a time when US trade policy is generating uncertainty, said Juan Carlos Baker, Mexico's former undersecretary for foreign trade, who helped negotiate the TPP as well as the US-Mexico-Canada Agreement with Trump during his first term.
Beyond that, Baker said, Mexico has seen increases in investment from fellow CPTPP members like Canada, Japan, Australia and Singapore.
Other allies still hold out hope that the US will rejoin the TPP someday, though even advocates like Froman see that as unlikely. “I think from a factual substantive point of view, the rationale for TPP still largely holds. I do not think there's necessarily a path back toward it, however, because I think the politics have moved on.”
Some argue the G-7 and other US allies should find a way to use the disruption created by Trump’s tariffs to help deliver what Bessent and others around the US president say they are seeking: A rebalanced global order in which the benefits are shared more equitably between trading partners.
Chinese Vice Premier He Lifeng shakes hands with US Treasury Secretary Scott Bessent, June 9, 2025.Photographer: Li Ying/Xinhua News Agency
To Geoffrey Gertz, who served as the top international economics adviser on Biden’s National Security Council and is now at the Center for a New American Security, a Washington think tank, such an outcome may harken back to something like the TPP even if it isn’t called that. In a recent article in Foreign Affairs, Gertz and CNAS colleague Emily Kilcrease, who served as a deputy US trade representative during the first Trump administration, called for other countries to look through Trump’s tariffs and work with Washington to find a new global equilibrium.
But Gertz also said that happening depends on the Trump administration changing its chaotic ways. The window for action and success is also short for the US and its trading partners.
“The longer this drags on, the harder and harder it is going to be,” Gertz said. “Countries are going to just start working around the United States more and more.”
One reason for optimism for those who fear the economic damage from Trump’s tariffs is that there are signs they are also affecting the domestic politics of trade. That may lead to Trump confronting the inverse of the political phenomenon that first helped elect him in 2016.
The political curse of globalization in 2016, Froman said, was that the pain in lost manufacturing jobs in the US and other rich-world industrial countries was highly visible while the broad benefits were often invisible. “You never walked out of a Walmart and said, ‘Thank goodness for the World Trade Organization.’”
“Trump has flipped this dynamic on its head: Everybody is going to feel the pain and it's highly visible because there's so much attention to it,” Froman said. Meanwhile, if Trump’s tariff promise holds true and a surge in manufacturing jobs results, it’s still likely to take years to develop—and even then with “a limited number of workers and a limited number of geographies who will see the benefit.”
Together with increasing costs to the global economy that Trump’s disruption is causing, that means his tariffs are leading to a vastly different world from the one the US president envisions. And perhaps one more like the vision he abandoned.
Methodology
The impact of TPP and tariffs on trade, GDP and sectoral employment is modeled using the WTO Global Trade Model (GTM), a dynamic and recursive model based on the GTAP Model (version 7) (Aguiar et al, 2019, Corong et al, 2017).
Bloomberg Economics starts the modeling with estimates of tariff rates from the GTAP database as of 2017, before the introduction of new tariffs by the first Trump administration – this constitutes the model baseline. Two scenarios are considered:
The TPP scenario assumes that, starting from 2017, all tariffs on goods between TPP member states go to zero within 15 years and that non-tariff costs on goods trade decline gradually by 10% and on services are reduced in line with USITC (2016). The modeling builds on the analysis by USITC (2016) and Petri and Plummer (2016) yielding results of a similar magnitude.
The Trump tariff scenario incorporates Bloomberg Economics’ estimates of the tariff shocks from the first Trump trade war (with China) and of the tariff hikes announced on all countries since Trump returned to the White House in January 2025 (all tariffs in place as of May 26 are used).
(An AI Summary was removed from a version of this story as it erroneously described the potential impact of tariffs.)
— With assistance from Alexandre Tanzi, Alex Vasquez, and Randy Thanthong-Knight