E-Paper
Trump's tariffs could cost every US household $3,487, hit GDP by $438 billion: New model
A new model calculated the impact of President Donald Trump's ‘Liberation Day’ tariffs on US households
A new model calculated the impact of President Donald Trump's ‘Liberation Day’ tariffs on US households and the country's GDP. Designed by The Conversation's Steven Vass, the model concluded that if other countries hit Washington with equivalent tariffs, the US GDP would take a massive $438.4 billion (1.45%) hit.
Last week, President Trump announced reciprocal tariffs on several trade partners with the minimum baseline for each country at 10%. As per the White House's tariff chart, Vietnam will take a 46% tariff hit, Thailand is at 36%, China at 34%, Indonesia pays 32%, Taiwan at 32% and Switzerland at 31%. Beijing's 34% hit is in addition to an existing 20% tariff - taking the number to 54%.
Read More: Donald Trump firm on tariff plans amid market turmoil: 'What’s going to happen, I can’t tell you'
While Canada and Mexico were exempted from the reciprocal tariffs under the USMCA, certain goods from them are subject to a 25% tariff as per Trump's executive order
The Conversation's Steven Vass calculated the impact of these tariffs on US households by using two scenarios- if countries retaliate in equivalent measures and if they don't. The report stated that the author used a ‘global model of the production, trade, and consumption of goods and services’.
If the trade partners do impose equivalent tariffs on US goods, Vass states that the US GDP will take a $438.4 billion hit. The number divided among the country's 126 million households, GDP per household decreases by $3,487 per year.
Read More: Over 50 nations seek trade talks with US following tariff move: Donald Trump officials
In the second scenario, Steven Vass states, that the tariffs decrease the United States' GDP by $149 billion (0.49%). “Aggregate GDP for the rest of the world decreases by $155 billion, more than twice the corresponding decrease when there was retaliation,” the report further adds.
Global markets crash in tariff fallout
On Sunday local time, the Dow Jones and S&P Futures fell 3.5% and 4.2% respectively. The future for the Nasdaq lost 5.3%.
Meanwhile, on Monday (local time) Japan’s Nikkei 225 index lost nearly 9% shortly after the market opened. China’s CSI300 blue-chip index fell 4.5%. In South Korea, the Kospi index fell 4.34%, and the small-cap Kosdaq dropped 3.48%.
