United States: What to Expect from a Protective US Trade Policy

Due to its economic size, economic policy measures, in particular trade policies, have a far‐reaching impact on global economic developments. This chapter quantifies the economic consequences of US protectionist trade aspirations. It focuses on trade policy scenarios, which have been communicated by the current US administration as potential new trade policies. The chapter draws on the results of a study of the ifo Institute conducted on behalf of the Bertelsmann Foundation. In the first simulation, a retraction from the North American Free Trade Agreement is considered. The chapter then illustrates the potential consequences of a “border tax adjustment” policy. It also simulates further measures to protect the US market by presuming an increase in American duties. The chapter presents robust quantitative results that can be expected if an increasingly protectionist US trade policy were to be implemented