In a move reminiscent of his first term in office, former President Donald Trump has doubled down on tariffs as a cornerstone of his trade policy. His latest proposals include sweeping tariffs on imports from China, Europe, and other trading partners, reigniting global trade tensions. But according to multiple leading economists, the macroeconomic toll on the U.S. economy may be smaller than many expect—amounting to a mere 0.2% decline in gross domestic product (GDP).

This projection has sparked debate: Is the economy resilient enough to absorb these disruptions? Or are economists underestimating the long-term ripple effects?

What the Numbers Say

Analysts at the nonpartisan Tax Foundation estimate that Trump’s proposed tariffs—including those under Sections 232 and 301, as well as new blanket tariffs—would reduce long-term U.S. GDP by around 0.2%, assuming no retaliation. With countermeasures from U.S. trading partners factored in, the impact could rise to up to 0.6%. Still, by most economic standards, this qualifies as “negligible” in aggregate terms.

In dollar terms, a 0.2% GDP hit translates to approximately $60–70 billion in annual output—a small fraction of the $28 trillion U.S. economy.

Sectoral Pain, Aggregate Calm

Despite the small headline figure, experts caution against interpreting these projections as harmless. “The phrase ‘negligible GDP impact’ doesn’t mean there won’t be pain,” says Carla Jenkins, senior economist at Brookline Global. “For industries like auto manufacturing, electronics, and agriculture, these tariffs could be deeply disruptive.”

Automakers are particularly concerned. Many U.S.-based companies rely on global supply chains, with crucial components sourced from Canada, Mexico, Germany, and China. Higher import costs could push up vehicle prices and reduce profit margins.

Similarly, farmers who depend on exports fear retaliation. In Trump’s first term, Chinese tariffs on soybeans and pork hit U.S. agriculture hard, prompting billions in federal subsidies.

Inflation Pressures Resurface

Tariffs function like a tax on imported goods, and the cost is usually passed on to consumers. Economists expect the new tariffs to nudge consumer prices upward. According to an estimate from the Peterson Institute for International Economics, blanket tariffs of 10%–15% on all imports could add 0.5% to 1.2% to inflation in the short term.

In a post-pandemic era where inflation is still higher than pre-COVID norms, this adds new pressure on households already struggling with elevated living costs.

Why the GDP Impact Is Still Modest

If tariffs are so disruptive to trade, why is the GDP impact just 0.2%?

The answer lies in the way GDP is calculated and the size of the U.S. consumer base. “The U.S. economy is extremely diversified and driven mostly by domestic consumption,” explains James Li, trade economist at the Mercatus Center. “Even a large hit to one or two sectors doesn’t always make a big dent in the total picture.”

Additionally, past experience suggests businesses adapt. Some shift supply chains, seek alternate markets, or pass on costs. That adaptability can mute the shock.

Political Calculus and Public Opinion

Trump’s tariff agenda is politically motivated as much as economically driven. He argues that foreign competitors, particularly China, have long taken advantage of the U.S. and that tariffs are a way to restore fairness.

Polls show mixed support. Some voters favor “Buy American” rhetoric, while others fear higher costs and trade wars. Trump’s supporters often view tariffs as a patriotic economic tool—even if the measurable impact is small.

Risks Beyond the Numbers

While the 0.2% headline figure looks manageable, economists warn of second-order risks. Uncertainty over trade rules can discourage business investment. Tariff volatility complicates long-term contracts. And if the U.S. faces retaliation, particularly in agriculture or aerospace, the effects could compound.

“Tariffs create a lot of unpredictability,” says Li. “And markets hate uncertainty. That doesn’t always show up in GDP right away.”