Analysis Highlights Macroeconomic Risks in Trump's Second Term

2025-04-01 politics

United States, Tuesday, 1 April 2025.
The Trump Administration 2.0 report outlines potential transformations in global GDP and key industries like automotive, semiconductors, and oil & gas under diverse policy scenarios from 2025-2028.

Global Economic Impact Projections

The baseline scenario analysis suggests a muted impact on global GDP through 2028, primarily buffered by growth in Asian emerging markets. However, under a pessimistic scenario, global GDP growth could face a significant 1.5 percentage point reduction by 2028 [1]. For the United States specifically, real GDP growth is projected to decelerate to 2.0% in 2028 under the baseline scenario, with a more concerning outlook of 0.5% growth under pessimistic conditions [1].

Immediate Trade Policy Implementation

The Trump administration is set to announce new ‘reciprocal’ tariffs on April 2, 2025, targeting multiple trading partners [2][3]. These measures will significantly expand the current effective tariff rate, which has already increased from 2.5% to approximately 9% [4]. The automotive sector faces particular pressure, with a confirmed 25% tariff on imported vehicles and key auto parts scheduled for implementation [3][4]. This has already triggered market reactions, with the S&P 500 falling 1.1% and the Nasdaq dropping 2% on March 27, 2025 [4].

International Response and Economic Implications

Key trading partners are preparing retaliatory measures. The European Union has signaled immediate firm action [5], while Canada has already announced a 25% tariff on CAD 30 billion of US imports, with potential expansion to CAD 125 billion if no resolution is reached [4]. Mexico’s economy is projected to contract by 0.4% in 2025 under the baseline scenario [1]. Goldman Sachs has raised its US recession probability to 35% for the coming year [5], reflecting growing concerns about the broader economic impact of these trade policies.

Industry-Specific Impacts

The semiconductor and technology sectors face particular uncertainty, with NVIDIA experiencing significant stock pressure and TSMC announcing plans for a USD 100 billion investment in US chip factories [4]. The oil and gas sector shows resilience with a reported USD 20 billion economic impact [6], though future growth projections remain closely tied to trade policy outcomes. These developments occur against a backdrop of shifting global supply chains, with Vietnam announcing tariff reductions on US products, including cutting automotive tariffs from up to 64% down to 32% [7].

Sources

trump policies macroeconomic report