Trade dispute Trump's tariffs would hit US exports hard, according to Ifo

SDA

4.2.2025 - 12:39

US President Donald Trump's punitive tariffs against Canada, Mexico and China threaten to cause major damage to the US economy. US exports could shrink by around a fifth if countermeasures are taken. (symbolic image)
US President Donald Trump's punitive tariffs against Canada, Mexico and China threaten to cause major damage to the US economy. US exports could shrink by around a fifth if countermeasures are taken. (symbolic image)
Keystone

US President Donald Trump's punitive tariffs against Canada, Mexico and China would cause major damage to the US economy. US exports could fall by up to 22% if the three countries were to take countermeasures on a comparable scale.

Keystone-SDA

This was calculated by the Munich-based economic research institute Ifo. Canada and Mexico, on the other hand, would not only have to fear a slump in their exports, but also negative consequences for industrial production in the medium term, according to a statement on Tuesday. China would suffer the least damage.

Damage for Canada and Mexico

According to US government data, Mexico and Canada are the USA's two most important trading partners, together accounting for just under 30 percent of imports and exports. "While China can more easily divert trade away from the US, Canada and Mexico are much more tied to the US due to their geographic location," said Lisandra Flach, head of the Ifo Center for International Economics.

Trump has now suspended the entry into force of the threatened 25 percent tariffs against Mexico and Canada for 30 days. The additional tariffs of 10 percent on imports from China, on the other hand, came into force on Tuesday.

US exports would fall

Flach and her colleagues have calculated the impact of the tariffs in two scenarios: one without countermeasures by the three countries and one with "dollar for dollar" countermeasures of a comparable scope. Without countermeasures by Mexico, China and Canada, US exports would fall by 14%, whereas in the "dollar for dollar" scenario they would fall by 22%.

According to the calculation, Germany, the fourth-largest trading partner of the USA, could even benefit slightly in both cases in the form of higher exports, although the Ifo Institute does not consider this to be very likely.

"However, due to Trump's threats to impose tariffs on US imports from the EU in the near future, the chances of such export growth appear to be very low in the near future," said Flach.