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Adam Allington
President Trump is poised to impose 25% tariffs on Mexico and Canada as soon as Saturday. Other possibilities include 10% to 60% across-the-board tariffs on China.
Wendong Zhang is an assistant professor of applied economics and policy at Cornell University. According to a new working paper, Zhang’s research shows that Trump’s tariffs could significantly disrupt global trade and result in multiple negative impacts to the U.S. economy.
Zhang says:
“Canada and Mexico would suffer the most if the U.S. imposed 25% tariffs with proportional retaliations from Canada and Mexico. Under that scenario, Canada and Mexico stand to lose 3.6% and 2% of real GDP respectively, while the U.S. would suffer a 0.3% real GDP loss.
“China would also experience a substantial welfare decreases from an escalation of its existing trade war with the U.S., but would also benefit from U.S. tariffs on Mexico and Canada.
“The U.S. would experience mixed welfare changes in different scenarios with smaller magnitudes: in the worst-case scenario, where the U.S. engages in tariffs on all trading partners along with China, Canada and Mexico, U.S. consumers could suffer 0.46% welfare or consumption loss.”