The tariff increase promoted by the United States since the beginning of the second administration of Donald Trump has no precedents. At least in the last century, such an abrupt adjustment had not been registered, in such a short period and with such an erratic implementation in commercial matters. The uniqueness of the changes and the unpredictability of the decision -making process generate uncertainty comparable to that observed at the beginning of the coronavirus pandemic. The big difference, of course, is that the current shock is self -imposed. All this complicates the estimation of the effects of new tariffs on the global economy. Likewise, from historical data and statistical models, BBVA Research has carried out a series of exercises to understand the consequences of the protectionist turn. Under the assumption that the encumbrances are maintained at the current levels – which implies an increase of about 13 percentage points of the middle tariff of the United States (which would amount to 28 if the announced increases were applied but today in pause) -, the simulations suggest that world Around 4% in the coming years, with falls greater than 10% in the export and import flows of the United States. Although in the short term external purchases would fall more than sales, generating an improvement of the commercial balance, over time both flows would converge, canceling the positive effect on US external accounts. The impact on global GDP would be between two and five tenths of lower growth in the short term. To the direct effects on production costs other indirects would be added, such as those generated by the increase in uncertainty and financial volatility. In addition, the consequences could be intensified in the medium and long term, mainly if the clash is not mitigated with other policies or if non -linear dynamics emerge, such as the distrust of global value chains or the weakening of multilateral trade institutions, despite the fact that the main business partners of the United States could be among the most harmed, the highest cost would probably fall on the US economy itself. The North American country would be beaten both by the negative impact of its rates, and for the reprisals of other countries. The simulations point to a rebound in inflation, and a possible contraction between a couple of tenths and a percentage point in the short term, and potentially of greater magnitude in the length. Additionally, the tariff escalation, among other factors, threatens the country's economic exceptionality and questions the dominant role of the dollar as a global reference currency. The United States commercial policy evokes the logic of self -inflicted damage in the name of an illusory victory. BBVA Dos Santos, BBVA Research.
