#TrumpTaxCuts

Tariff cuts can have significant effects on economies, particularly in terms of revenue loss and trade creation. According to the IMF, countries with higher initial tariffs and lower binding overhangs experience larger revenue losses and more substantial welfare gains. Here are some key effects¹:

- *Revenue Loss*: Countries may experience a decline in tariff revenue, ranging from 3% for low-income countries to 25% for middle-income countries. The weighted average revenue loss from agricultural tariff cuts can be around 17.9% to 23.2%.

- *Trade Creation*: Tariff cuts can lead to increased trade, with countries experiencing significant trade creation. This can benefit consumers and businesses by providing access to a wider range of products at lower prices.

- *Economic Impact*: The economic effects of tariff cuts can vary depending on the country's initial tariffs and binding overhangs. Countries with higher tariffs may experience more substantial revenue losses but also more significant trade creation and welfare gains.

- *GDP Impact*: Tariff reductions can result in fiscal revenue losses equivalent to 0.75% of GDP.