According to the CCTV News, on local time March 31st, US President Donald Trump said that. Trump also said that compared with other countries, the United States would be "very friendly", and "the tariff plan has been formulated".

However, a new economic model study found that if Trump implements a full 25% import tariff and triggers a trade war, the global economy will face losses of up to $1.4 trillion. Global inflationary pressures will increase dramatically, and the United States will be hit first.

According to the model research by economists at Aston University, in the scenario of a full-scale trade war, the United States will experience the most severe inflation effect among all countries. The study analyzed bilateral trade data from 132 countries in 2023 and constructed six scenarios of escalating trade wars. If trading partners retaliate with equivalent tariffs against Trump's tariff measures, U.S. exports will plummet by more than 43%.

This study shows that if countries impose 25% tariffs on each other, the effect will be similar to the 1930 trade war that exacerbated the Great Depression. Jun Du, professor of economics at Aston University, said: "These findings are consistent with historical precedents such as the Smoot-Hawley Tariff and modern trade conflicts, showing how protectionism erodes competitiveness, disrupts supply chains, and disproportionately increases costs for consumers."

The Initial Stage of the Trade War: North American Free Trade Area Suffers First

The model shows that at the initial stage of the trade war, imports and exports of the United States, Canada, and Mexico will drop significantly. Mexico's real income will decrease by 5%. As Canada, Mexico, and other countries take retaliatory measures, trade will be further affected, and the income declines of Mexico and Canada will increase.

In the hypothetical scenario where only Canada, Mexico, and other three countries impose a 25% retaliatory tariff on Trump's tariffs, all parties' trade will decrease by more than 30%. The shrinkage of trade leads to an increase in inflation and has a negative impact on "economic welfare" (measured by actual per capita GDP). However, the U.S. loss is less than that of Mexico and Canada, reflecting the balance of power in economic relations.

In this case, the U.S. economic welfare is expected to decline by 1.1%, while Mexico and Canada will see decreases of 7% and 5%, respectively, with the negative effects manifesting within 5 to 10 years.

The EU Gets Involved: Ireland Becomes the Biggest Sacrifice

When the United States imposes tariffs on the European Union, the scope of the trade war expands, and Ireland suffers the biggest blow in Europe. The EU's retaliatory measures further disrupt trade and deepen Ireland's suffering. The study points out that India, the UK, Japan, and South Korea may gain small benefits from trade diversion.

Notably, countries like Ireland, which have close trade relations with the United States, especially those dependent on highly integrated supply chains (such as pharmaceutical products), face particularly high risks.

Although Ireland's exports and imports increase slightly in the limited Canada-Mexico-U.S. trade war, under the U.S.-EU trade war, this growth will turn into a 6.6% decline in exports and nearly a 13% drop in imports.

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