Trade policy effects of Donald Trump 2.0

If the new US President Donald Trump raises US tariffs as threatened, this could significantly damage the global trade order. He has announced that he will impose a 10 % import tariff on all US imports. If this does not achieve his goal of reducing the US trade deficit, Trump has threatened to impose a 20 % tariff. Trade tariffs of 60 % on Chinese imports are on the table. We simulate the effects of such an increase in US import tariffs and a retaliation by the EU in a global economic model. For the German economy, the cumulative damage over the 4-year time horizon could amount to up to 215 billion euros.