The recently announced tariffs by President Trump are unprecedented, with a blanket rate of 10% and additional tariffs imposed on around 60 countries that could lead to an effective tariff rate between 22.5% and 30%, the highest in a century. These tariffs are based on a simplistic calculation of the trade deficit and could have significant economic repercussions. The Budget Lab projects that by 2025, US real GDP growth could decline by 0.9% to 1.0%, and the economy might be permanently reduced by 0.3% to 0.6%, representing an annual loss of $90 billion to $180 billion in 2024 dollars. Price levels are expected to rise by 2.1% to 2.6%, with individual households facing losses between $3,400 and $4,200. Food prices could spike by 3.7%. Neil Dutta from Renaissance Macro has raised the recession probability to 89%, indicating a heightened risk of economic downturn. The future remains uncertain as the market anticipates potential changes to these tariffs.

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