GTAP Resources: Resource Display
| GTAP Resource #7778 |
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"Winners and Losers: Quantifying the Impact of Trump’s Tariffs on Developing Economies " Authors: Vanzetti, David Abstract Trump’s 2025 “Liberation Day” tariffs raised concerns that the impacts on developing countries would be catastrophic. However, these concerns turned out to be misplaced. It seems that many, if not most, developing and least developed countries, may be better off. This is because most of the tariffs have been downgraded, and many countries gain from trade diversion away from China. That is, developing country exports replace Chinese exports to the U.S. This paper assesses these impacts using the GTAP computable general equilibrium trade model, applying tariff shocks derived from official US Executive Orders. Three scenarios are examined: (i) Liberation Day tariffs, adjusted for numerous exemptions; (ii) Retaliation, where partners impose equivalent tariffs on US exports; and (iii) Realignment, in which the U.S. scales back tariffs for most partners except China, which maintains higher protection. Modelling results indicate that the impact on developing countries is diverse. Under the three scenarios, U.S. imports are reduced by 13, 25 and 10 per cent, but global trade is reduced by only two to three per cent. Even in the worst case, the Liberation Day tariffs, which include tariffs as high as 50 per cent, national exports are reduced by five or six per cent, because exporters shut out of the U.S. find other markets. For most countries, the reduction in exports is less than one per cent. In terms of real GDP, 24 out of 37 regions show a positive result for the Liberation Day scenario. This drops to six for the Retaliation scenario, but rises to 28 for the more realistic Realignment scenario. Overall, Trump’s tariffs are bad policy for the U.S. and China, and bad policy globally, but the effects are not catastrophic and may even be positive for many countries. Opportunities exist for those that can adjust to changing circumstances. |
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- Preferential trading arrangements - Global |
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Public Access  GTAP Resource 7778 (498.2 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 4/30/2026 12:56:16 PM
