Potential Impact of Higher United States Tariffs on Asian Economies
Using the Global Trade Analysis Project model, the analysis estimates that higher US tariffs could halve the US trade deficit and boost nominal income. However, retaliatory tariffs would reduce US income and harm domestic production capacity and real gross domestic product (GDP), with the negative impact intensifying when tariffs extend to free trade agreement partners and prompt retaliation. Asian economies would be less affected than Canada and Mexico. For the People's Republic of China, its nominal income and trade surplus could decline, though its real GDP would only marginally decline. Retaliation by US trading partners would further harm US economic growth and slow global growth.

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