What if Trump goes harder, faster on tariffs?
Since we adopted greater protectionism in our November US forecast, the risks to our baseline have become more balanced. But from a risk-management perspective it’s worth considering the impact of more aggressive tariffs, so we have modelled four downside scenarios:
- Scenario 1 assumes the US hits China with 30% blanket tariffs and imposes 10% tariffs on all other imports.
- Scenario 2 reflects President-elect Donald Trump’s tariff proposals from early in the year, whereby the US slaps 60% tariffs on China, and a universal 10% on all other trading partners.
- Scenario 3 is an extreme, low-probability case in which Trump resorts to presidential powers not used in generations to immediately implement – rather than phasing in – blanket tariffs of 45% on China and 15% on the rest of the world. The economy suffers a shallow recession as other countries retaliate, and core inflation peaks above 3%.
- Scenario 4 is based on Trump’s recent announcement that he intends to impose additional 10% tariffs on China and 25% blanket tariffs on Canada and Mexico. If he follows through with this threat, we estimate US growth in 2025 will be 1.3ppts lower as domestic industries that rely on an integrated North American market seize up.

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