1、1750 Massachusetts Avenue,NW|Washington,DC 20036-1903 USA|+1.202.328.9000|WORKING PAPER25-13 The global economic effects of Trumps 2025 tariffsWarwick J.McKibbin,Marcus Noland,and Geoffrey ShuetrimJune 2025ABSTRACTThis paper explores the implications of President Donald Trumps so-called Liberation D

2、ay tariffs on the US and global economies under five alternative scenarios.As he continues to change his tariffs daily,the paper starts with a snapshot of two plausible,core,tariff scenarios based on his recent commentsone with high tariffs and one with low tariffs.We then consider two more scenario

3、s in which other economies retaliate to the high or low US tariffs by imposing matching tariffs on US exports.Our fifth scenario includes high US tariffs with retaliation plus a rise in the risk of holding US assets.This increase in risk causes a depreciation of the US dollar similar in scale to the

4、 shifts seen in the week following the Liberation Day tariffs announcement on April 2,2025.The paper starts by exploring the details of the changes made to the original tariff announcements from April 2 to May 10.This is particularly important for understanding the tariffs on Canada and Mexico,which

5、 were substantially reduced during the period through exemptions under the United States-Mexico-Canada Agreement(USMCA).We find the tariffs significantly reduce US and global economic growth and increase inflation in many economies,depending on how countries respond.However,the outcomes are less sev

6、ere than the original April 2 announcements implied.Many exemptions and tariff adjustments have been made since then for particular goods and countries.We find that retaliation by other countries worsens the economic losses,and inflation increases.The tariffs disproportionately hurt the US agricultu