We think Trump’s tariffs will cause real goods trade to fall by around 1% in the next two years, both by introducing frictions into the trading system and by causing global demand to weaken. But a lot of the fall in US imports from China will be offset by a rise in imports from elsewhere, while China’s exports will be redirected to other economies. So we think a reasonable base case is for goods trade as a share of GDP to remain around 45%. While this would represent a meaningful change from the decades leading up to the Global Financial Crisis – when trade as a share of GDP increased sharply – it would take a significant retaliation or a much broader protectionist shift to prompt a period of “deglobalisation”.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services